FG gives reasons for fuel subsidy removal, discloses alternative to kerosene

The Federal Government has explained why it finally bowed to age-long agitation for the removal of fuel subsidy, as well as why it fully deregulated the downstream sector of the petroleum industry.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, disclosed the reasons on Wednesday, April 8, 2020, during an interview with Channels TV.

According to the NNPC boss, the decision to finally end the fuel subsidy regime was taken in the best interest of ordinary Nigerians, as it would free up funds for the various tiers of government to develop critical infrastructure in education, health, transport and other sectors for their benefit. He said:

“We decided that fuel subsidy/under-recovery has to be stopped, subsidy is an elitist thing because it is the elites that benefit from it. They are the ones that have SUVs, four, five cars in their garages. The masses should be the ones to benefit. There are many things with the under-recovery because it makes us supply more than is needed.

“The stoppage of subsidy or under-recovery payment will ensure monies are freed up for the government to fund critical infrastructure project such as education, health, roads, and many others, for the benefit of the ordinary man.

There are many things wrong with the under-recovery because we are supplying more than we need, we are supplying the whole of West Africa. Therefore, the under-recovery itself is so over-bloated because we are subsidizing the whole of West Africa. That has to stop.’’

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The NNPC GMD pointed out that the removal of the subsidy would automatically correct the distortions it created in the market such as smuggling and products arbitrage. This will also encourage to establish retail outlets in the neighbouring countries.

The full deregulation of the downstream sector is also expected to attract more investments, as corporate organizations and multinational oil firms, who hitherto were reluctant to invest in refineries will be encouraged to do so.

On the other hand, Kyari addressed the agitation for price reduction of kerosene. He said that NNPC was focused on how to get all those that were still using kerosene for domestic cooking to start using Liquefied Petroleum Gas (LPG) which is popularly referred to as cooking gas. According to him, LPG is a cheaper fuel than kerosene as well as being safer and more environmentally friendly.

He admitted that the Minister of State for Petroleum Resources, Chief Timipre Sylvia, is leading the campaign for the formulation of policies that would deepen the adoption of LPG usage for domestic consumption.

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