The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said that the federal government would have had to cough up N16.4 billion every month to offset the subsidy claims of oil marketers had it not taken the decision to remove the subsidy on petrol.
Kachikwu, in a series of tweets sunday, explained that at the time the government made the decision, it was incurring about N13.7 kobo as subsidy on each litre of petrol bought by Nigerians.
But his tweet failed to resonate with the major labour union in the country – Nigeria Labour Congress (NLC) – which said on that it had commenced the full mobilisation of workers and civil servants for the nationwide strike and complete shutdown of the economy.
Kachikwu said at the rate of N13.7 kobo per litre as subsidy claims, the government would have paid out N16.4 billion to marketers monthly, adding that the government does not have such funds in its 2016 budget, more so now that the country’s earnings from crude oil have dropped.
He also listed the benefits of the new policy: “There is no provision for subsidy in 2016 appropriation. As of today, the PMS (petrol) price of N86.50 gives an estimated subsidy claim of N13.7 per litre, which translates to N16.4 billion monthly. There is no funding or appropriation to cover this.”
He added: “NNPC has continued to utilize crude oil volumes outside the 445,000 barrels per day, thereby creating major funding and remittance gaps into the Federation Account.”