The Minister of Finance, Budget and National Planning, Zainab Ahmed, has stated that Nigeria will remove fuel subsidies by next year and offer N5000-a-month transportation grant to the poorest Nigerians.
The minister who spoke at the launch of the World Bank Nigeria Development Update (NDU) on Tuesday, stated that the grant will be disbursed to nearly 30 to 40 million Nigerians who constitute the poorest population of the country.
She noted that the final number of beneficiaries will be based on the available resources following the removal of the petrol subsidy.
“The subsidies regime in the [oil] sector remains unsustainable and economically disingenuous,” she said.
“Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.
“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.”
According to the World Bank development update the poorest 40 percent in Nigeria consume less than 3 percent of the total petrol in Nigeria, highlighting that the rich were benefiting more from the subsidies.
“We are very optimistic that the recent developments in the oil sector, such as the Petroleum Industry Act (PIA) 2021, hopefully, the full reactivation of the 4 public refineries in the country, and the completion and coming on stream of the 3 private refineries under construction in 2022, would significantly boost contribution from the sector to our economic growth efforts,” Ahmed added.
“I agree with the Report that with the expansion of social protection policies during the pandemic, the government has an opportunity to phase out subsidies such as the PMS subsidy while utilizing cash transfers to safeguard the welfare of poor and middle-class households.”
The minister disclosed that the decision is set for June 2022, however, the federal government hopes to do this before June — in accordance with the Petroleum Industry Act (PIA).