Nigeria’s Minister of Finance, Zainab Ahmed has revealed that the country has removed its electricity subsidy and will follow with the much-talked-about petroleum subsidy.
Ahmed revealed this at a meeting of African Ministers of Finance and the International Monetary Fund (IMF) held virtually on Thursday.
The meeting was themed ‘Political Economy of Fiscal Reforms’ with every nation discussing its plans at fiscal reforms.
“We are cleaning up our subsidies. We had a setback; we were to remove fuel subsidy by July this year but there was a lot of pushback from the polity. We have elections coming and because of the hardship that companies and citizens went through during the COVID-19 pandemic, we just felt that the time was not right, so we pulled back on that, ” Ahmed said.
“But we have been able to quietly implement subsidy removal in the electricity sector and as we speak, we don’t have subsidies in the electricity sector. We did that incrementally over time by carefully adjusting the prices at some levels while holding the lower levels down.”
Ahmed commented on the petroleum subsidy and explained how it has increased deficits more than what the government bargained for.
Ahmed told other African Ministers that the global oil prices has led to the Nigerian government making adjustments on the budget, with the planned subsidy expected to remain at the same level.
“We are currently doing a budget amendment to accommodate incremental subsidy (removal) as a result of the reversal of the decision and we want to cap it at that,” Ahmed said.
“Hopefully, the parliament will agree with us and we are able to continue with our plan for subsidy (removal) otherwise the way things are going we will not be able to predict where the deficit will be as a result of the fluctuation in the global market.”
The IMF had in February advised the Nigerian government to remove subsidy on petroleum and also increase the VAT.