Adeosun Explains New Fuel Subsidy Regime
The contentious fuel subsidy has since returned to Nigeria’s energy lexicon after the government told Nigerians it has been abolished. This is like a reverse mode and Nigeria has gradually walked into it conciously.
But government officials are still looking for a way to explain the new subsidy regime and how it differs from the old one.
The latest to offer a new perspective is our dear Minister of Finance, Mrs Kemi Adeosun, who insisted that there was no subsidy payment on petrol as it was being done before now.
Adeosun was answering questions from State House correspondents at the Presidential Villa in Abuja on Wednesday on who pays the differential between the 171 Naira landing cost for petrol and the 145 Naira pump price.
She said: "On the question of subsidy, the price of oil for Nigeria today is a double-edged sword. So, for every dollar that goes up, we get more revenue but also because we are importing refined petroleum, it increases the landing cost of fuel.
“So, for every time we get excited that the oil price is going up, there is also a knock-on effect on the price of imported PMS and that is a function of us not having refining capacity. It is one unfortunate impact of that.
“Now, when there is talk of payment of subsidy, technically today, there is no subsidy but there is under-recovery. Why that is so is because the NNPC is currently doing all the importation.
“They are importing at a higher price than they are selling, which means they are losing money, which means effectively that that loss is being borne by everybody and effectively it reflects in the Federation Account.
“So, there is no subsidy payment in the way the old subsidy scheme used to work where they were paying the oil marketers, but there is an under recovery, a loss on the importation of the PMS being borne by the NNPC and therefore indirectly being borne by everyone of us.”
President Muhammadu Buhari had said that every excess revenue made from the difference between the budget oil benchmark jerked up to $47 per barrel by the Senate would be used for infrastructure.
One thing that the government will need to explain to Nigerians is how much would be left after the double-edge sword had cut off its share from the excess revenue to feed under recovery, which now appears to be the new name for subsidy.
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