FG considers fuel subsidy removal in June 2015

                 

The Federal Government has scheduled June 2015 for outright end of subsidy on Premium Motor Spirit (PMS) also known as petrol, New Telegraph gathered at the weekend.

A source at the Presidency told this newspaper that this agenda, which he called Plan A, is to ensure that the action does not affect the 2015 elections, which are scheduled for February 2015.

The government had earlier said that it would cut subsidies on petroleum products by half next year after sharp falls in global crude prices spurred a reversal of its 2015 budget downwards.

Finding showed that the government would save about N512.46 billion with the half-cut in subsidy, which it plans next year. “The Plan A is to pay full subsidy on the product till June and end it totally then while the Plan B is to pay half subsidy, spread across the 12 months in the Year 2015.

“The Plan A is what looks attractive to the government for now because it allows status quo to remain till after the election. Continue after the cut..

You know that as good and pressing as need for removal of subsidy is, the politics of opposition in the country will make it look unattractive and this can affect the outcome of the election,” the source said.

The Federal Government had earlier tried to end subsidy in 2012 in a bid to cut government spending and encourage investment in local refining, by doubling the price of a litre of petrol overnight to about N150 ($0.93) from about N65.

“The government has put in place adequate measure to secure the support of traditional rulers, union leaders, religious leaders, opinion moulders and all well-meaning Nigerians to support scheme, which is a part of the austerity measures to save our economy from the shock of falling oil prices,” he concluded.

President Goodluck Jonathan, it would be recalled, submitted the revised budget figures to lawmakers penultimate week, proposing to spend N458.68 billion ($2.59 billion) on petrol subsidy in 2015, down from N971.14 billion presented for 2014. It also assumed further cuts to petrol subsidies in 2016 to N408.68 billion and N371.18 billion for 2017.

Just last Thursday, the Co-ordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, had also proposed lowering the assumed benchmark oil price for the 2015 budget to $73 per barrel from the $78 proposed in September, after global crude prices plunged further. The 2015 budget proposals assumed an exchange rate of N162 to the US dollar, weaker than N160 assumed for 2014.