Page 5 - DMEA Week 48 2021

DMEA COMMENTARY DMEA

reasons. Olamilekan Adeola, the chairman of the policy change should take effect in mid-Feb-
the Senate’s Finance Committee, told reporters ruary of 2022 and not at mid-year, as Ahmed
on November 24 that he was concerned about suggested.
the proposal for paying out monthly travel grants Meanwhile, Ian Simm, principal advisor at
to the Nigerians who were likely to hit hardest by consultancy IGM Energy, raised questions about
higher PMS prices. the cost of implementing the travel grants and
The 2022 budget bill, which is now under the mechanism for their distribution.
discussion in the National Assembly, does not “Given Nigeria’s history of unrest in response
allocate the funds that will be needed for these to efforts to remove subsidies, there is room for
payments, he noted. Additionally, he said, the scepticism that the grants are little more than
government has not yet said exactly how it will a means for avoiding public anger [over infla-
determine who is eligible for the grants. tion],” he told NewsBase.
“I believe that if such a proposal is to come to “However, long-awaited progress in the Nige-
pass, a document to that effect must be sent to rian downstream is set to significantly reduce the
the National Assembly for us to see how feasible cost of PMS and other petroleum products with
this is and how we identify the 40mn Nigerians the launch of several modular refineries over the
that are going to benefit from this process,” he next few months, and bigger facilities like Dan-
was quoted as saying by Vanguard. gote and the NNPC units will enter the picture
“There are still a lot of issues to be deliberated later in 2022 and 2023,” he added. “Apparently set
upon and looked into if eventually this will come for a refining renaissance, Abuja may have been
to pass, [such as] how do we raise the money to emboldened to the point that it is ready to rip off
pay these 40mn Nigerians.” the subsidy band-aid.”
Other observers have asked whether the
travel grants would truly help the government Bumpy road to policy change
achieve its aim of freeing up funds now spent on None of the objections raised to the plan for
the gasoline subsidy for infrastructure projects. halting the PMS subsidy are likely to prevent
Lagos Chamber of Commerce and Industry Abuja from moving forward on this front. The
(LCCI) President Toki Makobunje and other Nigerian government has reasonably compelling
prominent business leaders cited by Vanguard reasons to stop keeping domestic gasoline prices
on November 29 pointed out that if Abuja paid far below market levels, and it is now legally obli-
40mn Nigerians a sum of NGN5,000 per month, gated under the PIA to change its policy.
it would end up spending NGN2.4 trillion over a Even so, the uncertainties surrounding the
period of 12 months. process indicate that the change may not hap-
This is roughly equivalent to current PMS pen as quickly as anticipated. As TUC noted, the
subsidy levels, they commented. government has yet to wrap up negotiations with
Also on November 29, This Day reported that labour unions. And as Adeola noted, Abuja has
Shubham Chaudhuri, the World Bank’s country not yet identified a source for the money it will
director for Nigeria, had raised a question about need to cover the transport grants.
the timing of the elimination of the gasoline As a result, Nigeria has no chance of meet-
price supports. ing the mid-February deadline mentioned by
In an interview with the newspaper, Chaud- Chaudhuri – and very little chance of changing
huri noted that Nigeria’s Petroleum Industry course in the summer of next year, as suggested
Act (PIA) called for the subsidies to be elimi- by Ahmed.
nated within six months of its adoption. Since Instead, the policy change is on track to
President Muhammadu Buhari signed the PIA unfold more in a slower and more chaotic
into law in mid-August of this year, he explained, fashion.™

Week 48 02•December•2021 www. NEWSBASE .com P5