Amend PIA To Legalise Fuel Subsidy Extension, Expert Urges FG

*Says Dangote refinery will transform Nigeria’s economy

A retired Deputy Director of the now-defunct Department of Petroleum Resources, Engineer Sunday Babalola, has urged the All Progressives Congress-led Federal Government under President Muhammadu Buhari to amend the Petroleum Industry Act 2021 to legalise the FG’s extension of subsidy on Premium Motor Spirit, (PMS) popularly petrol or fuel.

He stated that the reality is that the government has no choice in the circumstances because if they go ahead and remove the subsidy, the price of the white product will triple or quadruple with the present oil price and current Nigeria’s exchange rate.

He added that the removal of the subsidy will unleash more hardship and suffering on the already over-burdened Nigerians.

He also noted that the timing of the subsidy removal is political suicidal to the ruling APC and Buhari’s government as the 2023 general elections are very close.

President Buhari had assented to the Petroleum Industry Bill, on August 16, 2021. The Senate had passed the bill on July 15, 2021, while the House of Representatives passed it on July 16, ending a long wait since the early 2000s.

The Petroleum Industry Act provided legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, the development of host communities, and related matters.

There is a six-month provision in the PIA for subsidy which will expire in February 2022.

However, on 25 January 2022, the Federal Government said it is proposing to extend the subsidy removal implementation by another 18 months.

Babalola, who currently is Director of All Grace Energy, in an interview said it will be illegal for FG to continue subsidy on PMS after six months that the PIA became law if the section of the law which stated that removal of subsidy will be in six months after the assent to PIB is not amended.

“FG has options to explore to legalise its continued retention of fuel subsidy. The first option is to go back to the National Assembly and change that particular portion of that law and make it legal what they are doing. The option is for the government to decide to implement and find a way to improve the foreign exchange rate and that will bring down drastically the prices of petroleum products. But as it is, if they want to remove the subsidy, the price of white products will triple or quadruple what it is today. That is the reality.”

Babalola, a former acting Managing Director of Belemaoil Nigeria Limited, said FG’s decision to continue with the subsidy was a political overture to continue in power.

The energy expert stated that FG lost an auspicious time to remove fuel subsidies.
“Every party wants to be in power. Whatever decisions they make, they are also looking at the future of power and they do not want to lose power so they will not want to remove subsidies especially when we are moving close to elections. The time we had the opportunity was lost when oil prices came down drastically and the government, in turn, brought down the price of white products. That was the time I thought they would have removed the subsidy and said we are no longer subsidizing it”, he said.