A Review of the Nigerian Energy Industry

No decision yet to decide on fuel subsidy removal – Ministry of Finance

*Petrol nozzle.
*Petrol nozzle.

Oscarline Onwuemenyi

20 October 2015, Sweetcrude, Abuja – The Permanent Secretary in the Ministry of Finance, Mrs. Ana Daniel-Nwaobia, has disclosed that the Federal Government has not taken any decision on whether to remove or leave the present fuel subsidy, noting, however, that it is on the front burner of debate by officials of the government.

Daniel-Nwaobia, who stated this during the World Bank/International Monetary Fund (IMF) meeting in Peru, last week, explained that a lot of factors would be taken into consideration before such a decision could be taken.

“There are various considerations that will come into play before a decision would be reached. You have to take into consideration various issues before you remove subsidy. It’s a political issue, and you know we have a new government that is studying it, with time, we will know the position of government on that,” she said.

She said it was important to know that Nigeria is not the only country experiencing the effects
of the financial crunch, saying it is a global phenomenon.

“We noted that in our discussions with other ministers of finance, that everybody is struggling, and everyone is coming up with solutions and strategies on how to weather the storm for now,” she explained, adding that there’s a consensus that one way of addressing this, “is by mobilising domestic resources.”

Reforming the tax system which she said the Federal Government has started, is the right thing to do, stating that the engagement of McKinsey, (a firm of tax consultants), working with the Federal Inland Revenue Service (FIRS), would contribute to shoring up tax revenues.

She said, “In our engagement with the World Bank also, we sought assistance, so that they will work with us to see how we can improve on what is already on the ground.

“We are also looking at other areas of revenue, because our main concern is about how we can shore up our sources of revenue. We are going to engage also with the World Bank on how to give capacity and support to our Customs, because Customs is one of the key revenue earners in the country, so that we will be able to build their capacity and see how they can add to our revenue base.”

Mrs. Daniel-Nwaobia, said the issues of environment and the effect of climate change were also discussed by the Nigerian delegation at the meetings, because in her words: “we suffer the effect of climate change in terms of drought and flooding.” She said the Middle Belt region has suffered from flooding in the course of the year.

“Recently there was flood in the Middle Belt and the Northwestern part of the country in Kebbi and Sokoto states that washed away rice farms. The effects of climate change are very key and has a damning effect generally on the economy,” she warned.

She said the issue was thoroughly discussed in one of the meetings, as well as to how resources could be mobilised to tackle the issues surrounding climate change preparatory to the summit on climate change that is scheduled for Paris, France, later in the year. She said the Nigerian team had meeting with other funding agencies, including the International Finance Corporation (IFC) on how to fund some projects in the country.

“We told them about some of the reforms we are undertaking, especially in the area of building infrastructure, because one of the gaps we have noticed is the gap in infrastructure deficit,” the permanent secretary said.

Mrs. Daniel-Nwaobia said government is already thinking of how to set up an Infrastructure Fund, and looking for how to fund it.

“So we have discussed with the IFC and other agencies in the understanding that when we are able to identify some of these infrastructure projects, they will participate in the funding of some of these projects. It was thoroughly discussed in one of the meetings to the effect that we can mobilise resources to tackle the problem,” she stated.

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