The federal government has confirmed that it will scrap the fuel subsidy regime presently operational, insisting that Nigerians will be paid transport allowance as compensation.
Zainab Ahmed, minister of finance disclosed this in a chat with Channels Television, noting that fuel subsidy is costing Nigeria resources that should have been used for education and health.
She noted that it’s crucial for the country to exit from the fuel subsidy regime in 2023, stressing that the process of subsidising petrol is a “major drain and waste” on Nigeria’s economy.
Asked if the government is prepared for the rejection of fuel subsidy removal by labour unions and Nigerians, the minister said the government is planning the deployment of compressed natural gas (CNG) vehicles as an alternative to petrol-aided vehicles.
According to her, the federal government is considering the payment of transport allowance to Nigerians for six or 12 months to cushion the effect of fuel subsidy removal.
She disclosed that the transport allowance will be transferred directly to the bank accounts of the right people through the help of a bank verification number and national identity number.
“Right now we are negotiating with labour. We are planning and deploying CNG — which is an alternative to mass transit to PMS.
“But we’re also looking at providing some palliatives for a large number of the population in terms of maybe a transport subsidy for a short period like six months or if it is long, maybe nine months or maximum 12 months.
“This Transport subsidy would be given directly to individuals.”
The minister added that they are constrained at the moment due to the ongoing national identity registration process.
“This is to enable us make transfers to people using their BVNs, account number and national identity number, and we know that it has gone to the right people.
“That is part of the things we’re negotiating and working on. We are also engaging with the World Bank in designing a programme that will help us to provide succour for at least a minimum of 6 months, maximum of 12 months to enable us to make that transition.”
Asked when the fuel subsidy regime would end, she mentioned that the government made provision for fuel subsidy in the budget till June 2022.
“If you look at what I said earlier, as of July 2022, there is no provision for fuel subsidy.
“We’re trying to see if we can make it earlier. If we are able to get the funding to provide this alternative transport allowance, then we will be able to make it earlier,” the minister noted.