The Group Managing Director, NNPC Limited, Mele Kyari, has hinted that a litre of Petroleum Motor Spirit (PMS) also known as petrol may sell between N320 and N340 in 2022.
Kyari, who dropped the hint on yesterday, during his presentation at the World Bank Nigeria Development Update, November 2021 edition in Abuja, noted that this would be the outcome of the removal of subsidy.
According to him, the law provides that by the end of February 2022, the nation should be out of the subsidy regime.
“There will be no provision for it legally in our system, but I am also sure you will appreciate that the government has a bigger social responsibility to cater for the ordinary and therefore engage in a process that will ensure that we exit in the subtlest and easiest manner,” he said.
Recall that last Friday, the International Monetary Fund (IMF) Executive Board in its advice to the Nigerian Government, had called for “urgent fiscal and exchange rate reforms,” without which it said “the medium-term outlook faces sub-par growth.”
One of such reforms is the removal of fuel and electricity subsidies in line with the Petroleum Industry Act (PIA) 2021, and implementation of revenue-based fiscal consolidation.
The IMF said: “Nigeria’s past experiences with fuel subsidy removal, which have all been short-lived and reversed, underscore the importance of building a consensus and improving public trust regarding the protection of the poor and efficient and transparent use of the saved resources.”
“In addition, the implementation of cost-reflective electricity tariffs as of January 2022 should not be delayed. Well-targeted social assistance will be needed to cushion any negative impacts on the poor particularly in light of still elevated inflation,” it added.
There will be no provision for it (subsidy) legally in our system, but I am also sure you will appreciate that the government has a bigger social responsibility to cater for the ordinary and therefore engage in a process that will ensure that we exit in the subtlest and easiest manner.
LPG soaring price
Meanwhile on the hike in prices of liquefied petroleum gas, also called cooking gas, Kyari blamed it on market forces, due to a global crunch on supply of gas with many countries now threatened by lack of supply in December, when it is usually in high demand due to the Winter season.
He noted that since the product was not under any subsidy regime, irrespective of where it was produced, it would follow the global trend.
Kyari, however, assured that NNPC was working on increasing local production to meet the needs of consumers.
The Nigeria LNG Limited (NLNG) had earlier promised to divert more of its export gas to the domestic market to stem the rising prices, but this has not yet worked as planned.
N5,000/month subsidy palliative
To cushion the effects of the complete subsidy removal by mid-2022, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the Federal Government was working on some initiatives.
She said: “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 to 40 million deserving Nigerians.
“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 petroleum subsidy while utilising cash transfers to safeguard the welfare of poor and middle-class households.
“Towards this end, we intend to accelerate our structural reforms, particularly in the power sector, in governance, in the business environment to unlock the huge potentials of the economy, scale up the social safety net and deepen financial inclusion to reduce poverty and inequality gaps.”