Blackbox Nigeria

Economy

Why we refused to remove fuel subsidy — Buhari

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President Muhammadu Buhari has defended his administration’s refusal to remove fuel subsidy despite calls by global financial institutions like World Bank and the International Monetary Fund (IMF) as well as leading economists.

It would be recalled that in January, the Minister of Finance, Zainab Ahmed announced suspension of the planned removal of subsidy on petroleum products.

Some economists had argued that the removal of fuel subsidy is a necessary step towards long-needed reform in the petroleum sector.

However, in a recent interview with Bloomberg, Buhari asked why Nigeria would remove fuel subsidy at a time when western countries have embraced its implementation, saying “what is good for the goose is good for the gander”.

“What our western allies are learning the hard way is what looks good on paper and the human consequences are two different things. My government set in motion plans to remove the subsidy late last year,” Buhari said.

“After further consultation with stakeholders, and as events unfolded this year, such a move became increasingly untenable. Boosting internal production for refined products shall also help. Capacity is due to step up markedly later this year and next, as private players and modular refineries (Dangote Refinery, BUA Group Refinery, Waltersmith Refinery) come on board.”

The president noted that the exchange rate is still susceptible to external shocks that can suddenly and severely affect Nigerians.

“As we step up domestic production – both in fuel (enabled by PIA) and food (agricultural policies) – the inflationary threat shall diminish, and we can move toward unification,” he said.

Payment of fuel subsidies has been a recurring issue in successive administrations. Notably in 2012, then President Goodluck Jonathan attempted to remove fuel subsidy which led to the increase of the benchmark price of petrol from N65 to N141 per litre, resulting in a nationwide outrage.

Disturbed by the series of protests, the government made a u-turn and reversed fuel price to N97 — and later to N87 per litre before Jonathan left office in 2015.

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