Subsidy removal: We’re yet to find workable formula ― FG

THE federal government has said that its inability to find a formula that works for the country is the reason why it has not been able to design buffers against the removal of petroleum subsidy.

Minister of Finance, Zainab Ahmed, explained while briefing State House correspondents on the outcome of the meeting of the Federal Executive Council (FEC) in Abuja on Wednesday that Nigeria is a unique country as what works for others may not be operable within its context.

She said even though the Economic Management Team (EMT) has been discussing it periodically, it has not been able to decide what to do.

While insisting that the subsidy cannot be removed now, she said to do so, there would be the need to agree with the legislature on buffers to ameliorate the effects on the most vulnerable citizens.

However, she said the government will continue to work on it.

She explained: “Let me say that last week when were having IMF/World Bank, there was just one interactive session we had with Nigerian journalists. So, we didn’t have any session discussing subsidy. It was in an interview that somebody raised a question based on the Article 4 Report of the IMF.

“What they were asking is whether we are going to remove fuel subsidy and whether we agreed with IMF’s conclusion on subsidy removal.

“So, let me say that everywhere in the world where IMF does its review, it will always give advice because that’s the purpose of the review. And their advice is when you give subsidy whether it is fuel or power, their advice is always ‘look at how you can exit doing that. So that you are not doing that for petrol.’ And that’s the same advice they gave Nigeria.

“So, when I was asked, I said we agree with that advice. We need to find joe we can exit fuel subsidy. But how do we do that? We do that only when we have enough buffers to cushion the effect or removal for our people.

ALSO READ: May 29: Finance minister directs heads of agencies to submit progress reports

“It is up to the Executive in support with the legislature to agree what those buffers are.

“In some countries, they provided buses to transport people, in some counties they provide subsidies in a manner for the people that are directly requiring the subsidies.

“We have not found a way to do it. What we are doing now, the subsidy, it is everybody that it benefiting, whereas it should be the people that are really vulnerable that need the help that needs the subsidy.

“So, in the Executive with the support of the legislature, we have to find a formula that will work for Nigeria. And until we do that, we should not be contemplating removing the subsidy because, indeed when we do, there will be people that will suffer. So, we are not yet there.

“We discussed this periodically under the Economic Management Team. But we still haven’t found a formula that works for Nigeria. And you know that Nigeria is unique. What works for Ghana might not work here.

“So, it’s still work in progress for and there is no intention to remove fuel subsidy at this time.”

Ahmed disclosed that FEC approved three memos presented by her ministry for $150 million loan facility from the African Development Bank and $50 million loans from African Grow Together Fund to finance the Nigeria Electrification project.

She explained that the project is a nationwide initiative to be implemented by the rural electrification agency.

According to her, the project aligns with the strategy of the federal government on the electrifying rural community.

She said the second approval was for the North Core Dorsal regional transmission project, a project that is part of the pipeline for the West Africa power pool priority projects.

According to the Minister, the intention is for the creation of regional power pool in the region of West Africa with the aim of connecting Nigeria, Niger, Benin Republic, Togo, Burkina Faso with a high voltage 330 kilowatts transmission line, to facilitate energy trade amongst participants.

The project is in the total sum of $640 million out of which each of the four countries involved has a component with Nigeria having the smallest component of $27.3 million IADE loan facility.

She said the third load approval was $20 million, for the Lagos State Strategic Transport Master Plan, which she said is a facility from the French Development Agency.

She said: “The objective of the project is to improve the living conditions of the inhabitants of Lagos urban area and to promote urban development sitting by an efficient and effective transport system.

“The project has two major components, first is to rehabilitate urban roads and the creation of a minimum of eight equality bus corridors and the creation of two multi-model inter-changes at Marina and Mile 2. The second objective is to provide technical support for implementation and management.

“When completed, the project is expected to impact 1.8 million inhabitants of Lagos State and accumulative 1.5 million users per day for inter-model inter-changes with about 620,000 boardings at Mile 2 and 480,000 boardings at Marina, another estimated 630,000 boardings at TBS.

“The project is being undertaken by Lagos State agency, LAMATA under its own strategy.

“So, the federal government is borrowing to loan to Lagos following the same terms and conditions that we signed. Our assessment is that Lagos state has the capacity to repay the loan.”

FEC also approved the bill for the establishment of a Nigeria Army University in Biu which the council had previously approved in April 2018.

According to presidential spokesman, Garba Shehu, who disclosed this, the bill will be forwarded to the National Assembly for necessary legislation.

Also speaking, Minister of Transportation, Rotimi Amaechi, announced FEC’s approval the renegotiation of an earlier $8.7 billion loan facility for rail projects in the country, such that $3billion of it would be secured at a commercial rate.

He explained that “there was an approval for $8.7 billion for Ibadan to Kano to Oshogbo, to Minna to Abuja. Minna to Kaduna, Kaduna to Kano (rail line). What we sought for was the variation because the financing authority wanted to fund just $5.7 billion. We needed the approval to negotiate the remainder as a commercial loan.”

He added that President Buhari also approved that “we add Oshogbo to Ekiti as part of the construction. It was not there earlier. That will cost us a total of $500 million.”

Other approvals were for N474.4 million for the purchase of 23 operational vehicles (2 Hiace and 21 Hilux) for the Nigeria Civil Aviation Authority.