Why NNPC advocates removal of subsidy on petroleum products ─Kyari

*The retention of fuel subsidy payments would hamper the ability of the three tiers of the Nigerian Government to pay salaries in 2022, says Mele Kyari, Group Managing Director of Nigerian National Petroleum Company (NNPC) Limited

Isola Moses | ConsumerConnect

Though originally introduced to bring cost control and reduce the burden on consumers, the Nigerian National Petroleum Company (NNPC) Limited has restated the need for removal subsidy on petroleum products in the country.

ConsumerConnect reports Malam Mele Kyari, Group Managing Director and Chief Executive Officer (GMD/CEO) of NNPC, disclosed this development while addressing reporters during the launch of the World Bank’s Nigeria Development Update (NDU) biannual report at the weekend, in Abuja, FCT.

Kyari stated that the retention of fuel subsidy payment would hamper the ability of the three tiers of government to pay salaries in 2022.

The NNPC Chief also said: “When you take out N243billion from your total income every month, you are not able to fund your operations; and so you can’t meet your other fiscal obligations.

“Clearly, there is a challenge in the ability to pay. So, there is a reform going on, particularly in the energy sector and no one can stop.”

According to Kyari, whereas subsidy was introduced to bring cost control and reduce the burden on citizens in countries across the world, it has become a major financial burden that must be eliminated in the Nigerian economy.

In his remarks on the burning issue, Marco Antonio Hernandez, World Bank Lead Economist in Nigeria, also urged the Federal Government to remove the fuel subsidy before long.

Hernandez further painted a gloomy picture of Nigeria if the country continues with the fuel subsidy regime.

“Should the current revenue challenge continue till 2022, only Lagos State would be able to meet its financial obligations,” the World Bank Lead Economist.

In the meantime, latest NNPC report indicates N1.027 trillion had been deducted from monies accruing to the three tiers of government between February and October 2021, as subsidy payments.

Analysis of the various deductions showed the payments had increased progressively from N24.3billion to N61.9billion between February and April this year.

The report also noted the NNPC removed N126billion for the subsidy, and deducted N164.3billion the following month.

The Federal Government spent N103.2billion on fuel subsidy July 2021, and the government’s total spending on the ‘under-recovery policy’ for August was N173.1billion

While September’s deduction stood at N149.28billion, the government released N163.709 billion as subsidy payment October thia year.

A sum of N200billion also has been earmarked for subsidy payments for this month, according to the report.

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