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FG secured an $800 million facility from the World Bank to provide palliatives for vulnerable Nigerians as it prepares to remove fuel subsidies by June 2023.
The Nigerian federal government has secured an $800 million World Bank facility to provide cash transfers to the most vulnerable in society.
The finance minister, Mrs. Zainab Ahmed, disclosed this at the weekly Federal Executive Council (FEC) meeting, presided over by President Muhammadu Buhari.
The palliatives will be disbursed through cash transfers to about 50 million Nigerians belonging to the most vulnerable category of society.
According to her: “When we were working on the 2023 Medium Term Expenditure Framework and the Appropriation Act, we made that provision to enable us exit fuel subsidy by June 2023. We’re on course, we’re having different stakeholders’ engagements, we’ve secured some funding from the World Bank, that is the first tranche of palliatives that will enable us give cash transfers to the most vulnerable in our society that have now been registered in a national social register.
“Today that register has a list of 10 million households. Ten million households is equivalent to about 50 million Nigerians.”
Ahmed stated that the government was ready to go beyond cash transfer to cushion the effect that the subsidy removal would have on Nigerians.
“We also have to raise more resources to enable us do more than just the cash transfers and also in our engagements with the various stakeholders, the various kinds of tasks that we have go beyond the requirement of just giving cash transfers. Labour, for example, might be looking for mass transit for its members.
“So there are several things that we’re still planning and working on, some we can start executing quickly, some are more medium-term implementation.”
How much funding was received from the World Bank for the execution of the planned fuel subsidy exit
“$800 million for the scale up of the National Social Investment Programme at the World Bank and it’s secured, it’s ready for this disbursement.”
Transitioning government while implementation of fuel subsidy
The finance minister also disclosed that discussions were ongoing between the incumbent government and the incoming administration on modalities for the removal of fuel subsidy by the middle of this year. She stated that there were a lot of discussions going on at different levels, including with members of the transition committee of the incoming government.
The Nigerian government had earlier promised to remove the controversial petrol subsidy before the end of President Buhari’s tenure on May 29, 2023. However, the minister attributed the delay in the subsidy’s removal to the 2023 general election and the forthcoming national population census.
Ahmed stated that subsidy removal was a difficult political and economic decision for the government to take, with the subsidy cost per litre of petrol ranging between ₦350 to ₦400. She maintained that Nigeria spends about ₦250 billion monthly on subsidy.
What you should know
The Petroleum Industry Act 2021 provides for the total deregulation of the downstream sector, which implies the removal of subsidy and the establishment of a free market regime for the sector. However, the federal government postponed subsidy removal to the end of June 2023, citing the pains subsidy removal would bring on the poor and vulnerable masses.