Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari has said federal government was able to save over $400 million (N152 billion) following the removal of its fuel subsidy policy in 2020.
The NNPC boss who said this in an interview said he does not expect that the policy which had over the years drained the country’s scarce resources would be returned even when crude oil price rebounds.
According to Kyari, federal government would deploy the amount saved to the development of critical infrastructure in the country.
Federal government in April bowed to long-standing pressure to restructure the downstream segment of Nigerian oil industry through the removal of fuel subsidy, following the significant drop in the price of crude oil due to the coronavirus.
The government had said it would no longer be paying for under-recovery or subsidy on petrol.
But shedding more light on the government’s decision, Kyari said: “As you aware, Minister of State for Petroleum resources has made policy statement based on presidential directives on the issue of fuel subsidy. Also, Petroleum Products Pricing Regulatory Agency (PPPRA) has issued guidelines on the process for monitoring the pricing of petroleum products in the domestic market going forward.
“My personal view is that subsidy should be removed, and the funds deployed to areas of the economy particularly road infrastructure and education that need funds. Fuel subsidy is a misallocation of resources and it benefits mainly people who don’t need it – the rich.
“What we need is investment that upgrades the general good of the society and provide access and opportunity for social mobility for the poor. I do not foresee the return of subsidy when oil price rebounds. Just by removing subsidy in the 2020 budget, the nation is able to save over $400 million. The savings would be better deployed to education or upgrade of the critical infrastructure in the country.”
According to Kyari, ensuring energy security is one of the cardinal agenda of President Buhari’s administration.
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