Oil subsidy regime, also known as under-recovery for local consumption of Premium Motor Spirit (PMS), is to be sustained in 2020 fiscal year with government earmarking N450-billion for it in the 2020 budget.Finance, Budget and National Planning Minister Zainab Ahmed, confirmed this while giving a breakdown of the budget, now under consideration by the National Assembly.
The Nigerian government routinely imports petroleum and sells these imports at below cost on the domestic market to keep price levels down.
In 2003, this subsidy on imported petroleum products amounted to more than 1% of Nigeria’s Gross Domestic Product.
But Finance Minister said the subsidy is called ‘under-recovery’ because it was part of the Nigeria National Petroleum Corporation’s operating costs.
Over the years, international agencies like the World Bank, IMF, have advised the Nigerian government to stop subsidising fuel payment and channel the resources to building critical infrastructure for the teeming over 200 million population.
As it stands, payment of petroleum subsidy may take sometime before its elimiated. The government keeps the retail price of fuel at N145 – costing the government N450-billion and, more worrying is that any threat of increment causes outrage from consumers who fear it could drastically increase their cost of living.