The removal of fuel subsidy is a hard sell for the Federal Government. So it was punches and defences as representatives made their points at the Town Hall Meeting on Petroleum Subsidy Removal, organised by the Newspapers Proprietors Association of Nigeria, NPAN, which sought to find out: "Whose Interest Does it (removal) Serve, as captured by Kunle Kalejaiye. Excerpts:
Coordinator of the Economy and Minister of Finance – Mrs Ngozi Okonjo-Iweala
I want to urge the citizens of this country not to despair but to have trust in the Federal Government believing that they will deliver this time in spite of past broken promises. This policy (subsidy removal) will bring about a significant reduction in government's borrowing and save the country N1.12trillion, next year. But if retained, the Federal Government would borrow heavily to fund subsidy and recurrent budget next year.
The sum of N3.7trillion was used to fund fuel subsidy between 2006 and 2011, and N1.35trillion between January and October, 2011, which amounted to 30 per cent of total budget, 118 per cent of capital project and 4.18 per cent of the Gross Domestic Product, GDP.
Last year, we borrowed about N852billion to finance the deficit in the budget. In 2012, we will be forced to borrow about N1.12trillion, almost the total of our capital budget. It is not healthy that we should be borrowing money for capital and recurrent expenditure.
I want to assure Nigerians that the funds saved from subsidy removal would be judiciously utilised. The government is setting up a programme and a committee of credible and eminent Nigerians that will bring about transparency in the management of the resources and effective implementation of designated projects.
The price of premium motor spirit, PMS or petrol in the country is currently not determined by the forces of demand and supply. The current landing cost of PMS is about $133 per litre with additional N15.72. Letting markets determine the pump price of petrol in Nigeria would push it up to N120 ($0.74) per litre from N65, but it will save over N1 trillion ($6.13 billion) in subsidies in 2012.
Vanguard