<\/p>\n
The Presidential Economic Advisory Council has asked President Muhammadu Buhari to remove subsidy on petrol and adopt a pricing regime that reflects the cost of the commodity.<\/span><\/strong><\/p>\n <\/p>\n Buhari had in 2019 set up the council chaired by Prof Doyin Salami to replace the regime\u2019s defunct Economic Management Team led by Vice-President Yemi Osinbajo.<\/span><\/p>\n <\/p>\n The council, charged with the responsibility of advising the President on economic policy matters including fiscal analysis, economic growth and a range of internal and global economic issues working with the relevant cabinet members and heads of monetary and fiscal agencies, reports directly to Buhari.<\/span><\/p>\n <\/p>\n Its advice that petrol subsidy be removed formed part of its presentation at its sixth regular meeting with the President last Friday, when it also warned that the subsidy regime would worsen solvency of state governments.<\/span><\/p>\n <\/p>\n According to the document presented at the meeting, a copy of which was obtained by The PUNCH on Sunday, the council drew Buhari\u2019s attention to three issues that it said required urgent attention.<\/span><\/p>\n <\/p>\n They include the need for policy clarity with regard to fuel subsidies which it said would help resolve the dilemma which rising crude oil prices present; the worsening security environment which it said had adversely affected food production leading to higher prices; and the need for the Petroleum Industry Bill to encourage investment in Nigeria\u2019s oil and gas sector.<\/span><\/p>\n <\/p>\n The council noted that improving crude oil prices had led to what it called the Nigerian \u2018dilemma.\u2019<\/span><\/p>\n <\/p>\n The dilemma, it said, resulted from the conflicting implications of higher crude oil prices on the nation\u2019s economy.<\/span><\/p>\n <\/p>\n According to the council, rising crude oil prices improve public sector revenue and reserves of foreign currency while higher crude oil prices mean that the cost of imported petrol should be higher than the N167\/litre being paid at filling stations.<\/span><\/p>\n <\/p>\n It noted that the restoration of subsidies created a set of significant problems. It added\u00a0 that as there was no provision for subsidy payments in the 2021 budget, such payments would have to be done by the Nigerian National Petroleum Corporation thereby further reducing revenues accruing to the Federation Account.<\/span><\/p>\n <\/p>\n This situation, it said, was capable of worsening the solvency of many state governments and could take the country back to 2015 when the Federal Government had to provide \u2018bailout\u2019 funding to the states.<\/span><\/p>\n <\/p>\n The council stated, \u201cAs there is no provision for subsidy payments in the 2021 budget, such payments will have to be done by the NNPC thereby further reducing revenues accruing to the Federation\u00a0 Account.<\/span><\/p>\n <\/p>\n \u201cThe solvency of many state governments will worsen \u2013 this could take us back to 2015 when the Federal Government had to provide \u2018bailout\u2019 funding to the states.\u201d<\/span><\/p>\n <\/p>\n The Salami-led group added that restoration of subsidy made investment in Nigeria\u2019s downstream oil sector unattractive.<\/span><\/p>\n <\/p>\n The document read, \u201cCouncil advises as follows: there is an urgent need for clarity and consistency in petrol pricing policy.<\/span><\/p>\n <\/p>\n \u201cSubsidy on petrol be removed and a pricing regime which reflects the cost of petrol adopted.<\/span><\/p>\n <\/p>\n \u201cIt is noteworthy that with the exception of petrol, the prices of all other petroleum products have been deregulated; the cost of retaining the subsidy outweighs the benefits, or that the benefits of removing the subsidy are far greater than the costs.<\/span><\/p>\n <\/p>\n \u201cData published by the National Bureau of Statistics also show that petrol prices are not the same across Nigeria.<\/span><\/p>\n <\/p>\n \u201cIn March 2021, petrol prices range between N162.17 and N200.87\/litre \u2013the highest being in Lagos State whilst the lowest prices are obtained in Adamawa State.<\/span><\/p>\n <\/p>\n \u201cCouncil is especially concerned that in addition to further worsening government revenue, re-introduction of subsidies will jeopardise investment in the oil sector and also create uncertainty about general government policy on pricing.\u201d<\/span><\/p>\n <\/p>\n On security, the council noted that there was a consensus on the worsening of the security situation in Nigeria.<\/span><\/p>\n <\/p>\n It listed the sources of security challenges to include Boko Haram and ethno-religious conflicts; political violence; economic and resource-based violence; organised violent groups; and herders\/farmers \/settlers clashes.<\/span><\/p>\n <\/p>\n The council noted that violence had had impact on human capital and on poverty and vulnerability while physical capital and infrastructure are often damaged; while business and investment suffer.<\/span><\/p>\n <\/p>\n It noted that the economic cost of insecurity was estimated at 2.6 per cent of GDP in 2020, or $10.3 billion.<\/span><\/p>\n <\/p>\n On the way out, the council advised the FG to among others, \u201cDefeat Boko Haram decisively, as a decisive defeat is necessary to permanently keep the insurgency at bay.<\/span><\/p>\n <\/p>\n \u201cThere is need to review strategy as to the way forward, examining all options -including seeking the assistance of external powers.<\/span><\/p>\n <\/p>\n \u201cImprove the implementation of policies aimed at improving access and quality of education in underserved areas.<\/span><\/p>\n <\/p>\n \u201cImplement existing law on compulsory attendance of primary school to reduce the number of out of school children, a key recruiting ground for thugs.<\/span><\/p>\n <\/p>\n \u201cResolve grievances around exclusion from access to power, opportunity, and representation through dialogue.<\/span><\/p>\n <\/p>\n \u201cTo be effective, government should involve civil society, the private sector, regional and international organisations focused on peace and conflict resolution in roundtable discussions aimed at resolution of grievances.\u201d<\/span><\/p>\n <\/p>\n On the PIB, the council noted the progress of the bill through the National Assembly.<\/span><\/p>\n <\/p>\n It said, \u201cThe importance of this bill to the national economy cannot be overstated.<\/span><\/p>\n <\/p>\n \u201cWhen enacted, this law will have a profound effect beyond the oil and gas sector.<\/span><\/p>\n <\/p>\n \u201cPotentially, this bill could provide a basis for building and industrial economy for Nigeria.<\/span><\/p>\n <\/p>\n \u201cImplementation of the Paris Agreement has seen a continuous global transition away from fossil fuels towards renewables as primary energy source.<\/span><\/p>\n <\/p>\n \u201cThe PIB will join the National Petroleum Policy and the National Gas policy in defining the environment for investment in the oil and gas sector and also influence sentiment around Nigeria as an investment destination.\u201d<\/span><\/p>\n <\/p>\n In a statement released by the Special Adviser to the President on Media and Publicity, Femi Adesina, at the end of the meeting on Friday, the Presidency left out the issue of removal of petrol subsidy from the issues raised by the council while it mentioned the remaining two issues- security and the PIB.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" The Presidential Economic Advisory Council has asked President Muhammadu Buhari to remove subsidy on petrol and adopt a pricing regime that reflects the cost of the commodity. Buhari had in 2019 set up the council chaired by Prof Doyin Salami to replace the regime\u2019s defunct Economic Management Team led by Vice-President Yemi Osinbajo. […]<\/p>\n","protected":false},"author":1,"featured_media":1039,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[15,4],"tags":[86,634,633,632],"class_list":["post-1038","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-news","category-economy","tag-buhari","tag-economic-council","tag-petrol-subsidy","tag-remove"],"yoast_head":"\n