Governors have described payment of oil subsidy to marketers by the Nigeria National Petroleum Corporation (NNPC) as an unsustainable policy.
The governors called on the federal government to do away with it, saying fuel subsidy is a drain on the nation’s resources.
Kayode Fayemi, chairman of the Nigeria Governors’ Forum (NGF), made the demand when he led a delegation to Mele Kyari, the new group managing director of the corporation.
He said subsidy remains a major drawback on government revenues, adding that there is need to consider a new deal on how government will absorb its cost.
This he said has become necessary given the new reality of low oil revenues and rising government commitments.
“It is important to highlight that subsidy remains a major drawback on government revenues. We may need to consider a new deal on how governments will absorb the cost of subsidy,” he said.
“This has become necessary given the new reality of low oil revenues and rising government commitments. We believe that at the current course, subsidy costs will continue to offset any recovery in the oil market. The country recorded one of its lowest cost of subsidy in 2016 when oil traded at an average of US$48.11 pb. Total subsidy that year was around N28.6 billion; but the amount rose to N219 billion in 2017 and N345.5 billion by mid-2018, as the price of oil and domestic PMS consumption rebounded.These are important considerations for us, with direct implications on energy security and economic stability in the country.”
The NGF chairman said having worked with Kyari when he was minister of mines and steel, he believes that the NNPC GMD is a man of integrity who would deliver on his promises to the nation.
Governors are the latest to oppose fuel subsidy. Last month, Muhammadu Sanusi, emir of Kano, asked President Muhammadu Buhari to end fuel subsidy. He had said “N1.5 trillion on subsidy is N1.5 trillion out of education“.