The federal government is planning to spend N2.4tr under a transport palliative scheme to cushion the effect of the planned removal of oil subsidy proposed for next year.
This amount, according to a computation by Daily Trust, is over N600 billion higher than what the government spends to keep the price band of the Premium Motor Spirit (MPS) otherwise called petrol, at between N162 and N165 per litre. The government’s annual subsidy spending stands at N1.8tr.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, at the launch of the World Bank Nigeria Development Update in Abuja on Tuesday said the subsidy was not benefiting the poor as she re-echoed the government’s determination to remove both subsidies on petrol and electricity next year.
She hinted that the petrol price will be jerk up before June 2022, in line with the Petroleum Industry Act (PIA).
The PIA signed by President Muhammadu Buhari on August 16, 2021, stipulates the removal of petrol subsidy within six months of the Act’s implementation.
The Group Managing Director of NNPC Ltd, Malam Mele Kyari speaking at the event said petrol price may rise to N340/litre upon the removal of the subsidy.
To cushion the effect of the subsidy removal, the finance minister said, the federal government will give the poorest Nigerians a transportation grant of N5,000 every month.
The minister estimated that about 30 to 40 million Nigerians, who are the poorest in the country, would have access to the grant.
Analysis of the proposal shows that at N5,000 for 40m Nigerians, the government will spend N200bn every month and that will amount to N2.4tr within 12 months of the scheme (one year).
The scheme is being arranged despite a lapse in the national data to determine the poorest category of Nigerians, with experts doubting the government’s claim for a dispassionate social register.
In March this year, the Permanent Secretary, Ministry of Humanitarian Affairs, Disaster Management and Social Development, Alhaji Bashir Alkali, said only 30m Nigerians are captured in the National Social Register (NSR) from 36 states and the Federal Capital Territory (FCT) comprising seven million poor and vulnerable households.
The finance minister on Wednesday said the government was yet to determine the modalities for administering the palliative.
Clarifying the policy statement after the Federal Executive Council (FEC) meeting on Wednesday, the finance minister said the N5,000 monthly transport grant planned for poor Nigerians would last for six to 12 months.
“How long will this intervention last? Okay, six months to 12 months. And we’re saying the committee is still working. So, we’ll know on Monday, how long, how much and then the procedure on a state-by-state basis.”
The minister defended the need for the support, saying: “Government is providing the support and support is to augment what the families already have. We wish we could do more.
“But we’re also limited in terms of the maximum of what the government can afford. But there’s nothing stopping the states from adding more than the N5,000 that is going to come from the federation.
“So, some states might decide to do more where they can afford it. The federal government right now is just under this committee, looking at N5000 per month.”