Why Committee Advises Buhari On Removal Fuel Subsidy

The transition committee set up by President Muhammadu Buhari shortly after he was declared the winner of the March 28 presidential election advised him to end the fuel subsidy programme and privatise the nation’s four refineries.

Nigeria, which is Africa’s top oil producer and biggest economy, heavily subsidises petrol and kerosene consumption and relies on imports for the bulk of its domestic demand due to an underperforming refining system.

Buhari is said to be considering the recommendations made in the strategy report produced by the 19-member committee led by Ahmed Joda.

“The committee also suggested to Mr. President that the four refineries be privatised so that the government stops wasting money on annual turnaround maintenance,” he said.

However, the Special Adviser to the President on Media and Publicity, Mr. Femi Adesina, told our correspondent in a telephone interview that it was premature to comment on the proposal by the committee since its report had not been officially released and discussed by the government.

Buhari’s predecessor, Goodluck Jonathan, cut subsidies by 90 per cent in the 2015 budget because government revenues had been hit by the slump in oil prices.

Nigeria attempted to end subsidies three years ago, doubling the price of a litre of petrol overnight, in efforts to cut government spending.

The move angered citizens who saw cheap pump prices as the only benefit they derive from living in an oil-rich country, and led to eight days of nationwide strikes. The government later reinstated part of the subsidy to end the strikes.

The prospect of the subsidy removal contributed to fuel shortages in the final days of Jonathan’s administration as importers went on strike claiming that they were owed arrears of subsidy claims by the government.

Last week, the Nigerian National Petroleum Corporation said its four oil refineries would resume production in July.

The ailing refinery system generally runs well below capacity, sometimes at just 20 per cent, due to neglect and pipeline sabotage.

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