The Minister of state for Petroleum Resources, Dr. Ibe Kachikwu yesterday explained that if not for the decision to remove subsidy on petrol, the federal government would have been spending N16.4 billion every month to offset the subsidy claims of oil marketers.
Kachikwu, who made this assertion in a series of tweets, disclosed that at the time the government took the decision, it was incurring about N13.7 kobo to subsidize each litre of petrol bought by Nigerians.
The minister stated that at the rate of N13.7 kobo per litre as subsidy claims, the government would have paid out N16.4 billion to marketers monthly, adding that the government does not have such funds in its 2016 budget, more so now that the country’s earnings from crude oil have dropped.
He also listed the benefits of the new policy: “There is no provision for subsidy in 2016 appropriation. As of today, the PMS (petrol) price of N86.50 gives an estimated subsidy claim of N13.7 per litre, which translates to N16.4 billion monthly. There is no funding or appropriation to cover this.”
Kachikwu maintained that the, “NNPC has continued to utilise crude oil volumes outside the 445,000 barrels per day, thereby creating major funding and remittance gaps into the Federation Account.”
