House Of Reps. Members Call On FG To Move Subsidy From Petroleum To Agricultural Products


The Chairman, House of Representatives Committee on Petroleum matters, Mr Joseph Akinlaja, has voiced his support, in line with the recommendation by the International Monetary Fund (IMF), for the removal of subsidy from petroleum to agricultural products.

Akinlaja said, in a chat yesterday with journalists that, “IMF will talk to Nigeria in an advisory capacity; not to run our government for us. It is the government that is supposed to take the decision. But I believe with my experience in the industry over the years, that the issue of subsidy for petroleum products is outdated.”

Fuel subsidy is outdated, subsidize farm produce.

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Furthermore, he stated that subsidy is suitable for agricultural products. He believes that the Nigerian government or the people responsible will act like some of the advanced economies who subsidize agriculture. “For American farmers not to go out of business, if they produce, there are organizations to buy the produce from the farmers and preserve them, so that the farmers can produce next year. But here, it is the middlemen who are being subsidised in our Nigerian situation.”

Akinlaja described fuel subsidy as ‘outdated’, stating that farm produce should be subsidized instead. He said this while criticizing the Federal Government’s continued efforts to make payments without appropriation by the National Assembly. Also, the amount being expended on subsidy was only known to the Nigerian National Petroleum Corporation (NNPC) and the Minister of Petroleum Resources – Dr Ibe Kachikwu.

IMF’s call to FG on the fuel subsidy removal.

Meanwhile, Christine Lagarde, Managing Director, International Monetary Fund, during a press conference at the recent joint annual spring meetings with the World Bank in Washington DC, had called on the Federal Government of Nigeria to remove fuel subsidy, saying it was the right thing to do.

Lagarde, in her statement, said that “With the low revenue mobilisation that existed in Nigeria in terms of tax to Gross Domestic Products, it was important for the country to remove fuel subsidy. And by so doing, she advised, the country would be able to move funds into improving health, education, and infrastructure.”

Reacting to the statement, the Minister of Finance, Mrs. Zainab Ahmed, had said, “We (Nigeria) do not have any plan to remove fuel subsidy this time because we are yet to design buffers that will enable us remove subsidy and provide cushions for our people.”

Distribution of petroleum products at the prevailing market price.

“The executive is in charge of the supply and the distribution of petroleum products in Nigeria. The same executive said petrol should, as a matter of policy, not sell for more than N145 per litre. But the same government, specifically the NNPC, sometime last year, during the scarcity, said the landing cost was N171.50,” Akinlaja stated.

“If the oil marketers are instructed not to sell above N145, and the same government talks about N171.50 as the landing cost, who is paying the difference of N26.50? Definitely, it has to be the government.”

What does this mean to the common Nigerian?

Subsidy is a money grant or a financial support given to a sector or business to help keep its prices low. Channeling funds on petroleum products actually helps keep the price low at N145. If this is done, other sectors such as health, power, agriculture, security, infrastructure, etc. will suffer from reduced funds allocated by the government.

Analysts are of the opinion that Nigeria does not have the discipline to manage subsidy yet. This is because cost of living in some Nigerian states will rise by a margin when subsidy is placed on only petroleum products, leaving some sectors better off and others worse off.

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