- The federal government has revealed why it can no longer continue to pay fuel subsidy
- Timipre Sylva, minister of state for petroleum resources, said the FG lacks the money to continue to pay due to the economic effects of Covid-19
- Sylva, however, revealed what the FG is planning to do to address the hike in petrol price which is as a result of the subsidy removal
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The federal government has explained why it stopped paying fuel subsidy, a development that has led to an increase in fuel price as it is now determined by the market.
Nigerian Tribune reports that the government said it currently lacks the money to continue to pay fuel subsidy due to the economic implications of the coronavirus pandemic.
Legit.ng gathers that the explanation was offered by the minister of state for petroleum resources, Timipre Sylva, on Thursday, September 3, in Abuja in a briefing to mark his one year in office.
The minister further said that the Nigerian government has also resolved to step aside from fixing fuel prices.
He clarified that the decision of the government to deregulate the downstream sector and suspend subsidy payment was not political, adding that the police has saved the nation about N1 trillion since its introduction in March 2020.
To cushion the harsh effects of the new policy on Nigerians, the minister said the Nigerian government would hasten a roll-out of a cleaner and cheaper alternative to petrol, such as Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG).
“We think the solution to this should be sustainable, hence the palliative that the government is considering, is that we are introducing a fuel that is cheaper and better. In the end, I do not think people would feel the increase that much, as gas would be cheaper by half than PMS," he said.
In his earlier comment, Sylva had explained that the federal government concluded that it was unrealistic to continue with the burden of subsidizing PMS to the tune of trillions of naira every year.
According to him, the decision was taken after a thorough examination of the economics of subsidising PMS for domestic consumption.
He also stated that the subsidy was benefiting the rich rather than poor and ordinary Nigerians.
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