Page 6 - DMEA Week 03 2022

DMEA COMMENTARY DMEA

Nigeria’s bumpy road to

PIA implementation in 2022

Africa’s biggest oil producer is heading for a political
traffic jam, thanks to a dispute over gasoline subsidies.

AFRICA TO date, one of Nigerian President Muham- gasoline prices within six months of its adoption.
madu Buhari’s biggest accomplishments has Five months have already passed since Buhari
been the adoption of the Petroleum Industry Act signed the bill, and it is far from clear that the
WHAT: (PIA), a new law governing the oil and gas sector. government will meet this deadline.
The president of Nigeria’s In contrast to the failed and drawn-out efforts Certainly, Finance Minister Zainab Ahmed
Senate has indicated of its predecessors, Buhari’s administration man- has made a good-faith attempt to do so. Last
that gasoline subsidies aged to submit draft legislation to the National autumn, she said Abuja intended to eliminate
will not be eliminated as Congress and then secure its passage through the gasoline subsidy completely as of mid-2022.
planned. both houses of the legislature in less than a year. Additionally, she stressed that the government
As a result, the president was able to sign the bill would work to mitigate the impact of higher fuel
WHY: into law last August, clearing the way for the prices for impoverished Nigerians.
The price support places introduction of a new governance and operating Specifically, she stated that one of the meas-
major strains on the regime for the industry that accounts for about ures being contemplated was the payment of a
country’s budget. 10% of the country’s GDP and more than 85% of travel grant of NGN5,000 ($12.06) per month
its total export revenue. to the country’s 20-40mn poorest citizens for a
WHAT NEXT: Nigerian government officials have said they period of up to 12 months, worth around $5.8bn.
Resolving the gasoline hope the adoption of the PIA will help attract for- She also asserted that it was worthwhile to bear
subsidy dispute is likely eign funding for oil and gas projects by resolv- the cost of this temporary programme rather
to slow implementation of ing investors’ questions about the stability of than continue to pay the subsidy, which was
the PIA. taxation and regulatory regimes. They have also currently costing Abuja NGN243bn ($586mn)
noted that the new law is designed to free up per month, or nearly NGN3 trillion ($7.23bn)
budget funding for infrastructure projects and per year.
domestic programmes by eliminating Nigeria’s At the time, Ahmed reported that the Nige-
long-standing subsidies for gasoline (known rian government had drawn up this year’s spend-
locally as premium motor spirit, or PMS). ing plans with this agenda in mind. Under the
2022 budget, she explained, Abuja is only sup-
Ahmed’s roadmap posed to continue paying the subsidy during the
There was never any reason to believe that Nige- first half of the new year.
ria would accomplish the latter feat without any
bumps, skids or swerves along the road. Lawan’s directions from Buhari
The PIA lays out a very tight schedule for Nevertheless, the government appears to be in
abandoning the subsidy, as it calls upon Abuja the process of shifting its plan abruptly to the
to stop providing artificial support to domestic back burner.

Buhari was happy
to sign the PIA, but
appears less willing
to sign off on subsidy
removal.

P6 www. NEWSBASE .com Week 03 20•January•2022