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BIG STORY

Talking Frankly On Removal Of Fuel Subsidy By Babajide Fadoju 

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Now that subsidy is gone, what is the plan?

Subsidies play a significant role in shaping economic policies in many countries, including Nigeria.

Subsidies are government incentives that aim to support specific industries or sectors by reducing the cost of goods or services.

However, the effect of subsidy removal on the Nigerian economy has been a subject of much debate and analysis.

Subsidies have long been used by the Nigerian government to support various sectors primarily the energy sector.

These subsidies are intended to stimulate economic growth, encourage investment, and alleviate the burden of high costs on consumers.

For instance, fuel subsidies have been implemented to ensure affordable prices for petroleum products, as Nigeria heavily relies on oil for its revenue.

Due to several imports, the subsidy on petrol has to be removed. For one the federal government cannot afford the subsidy payment anymore.

By removing subsidies, the government can redirect its spending towards more productive sectors.

The funds that were previously allocated to subsidies can be channelled into infrastructure development, healthcare, education, and other critical areas that can foster long-term economic growth.

The removal of subsidy is good for the industry; growth will be engendered as several players can now play competitively, efficiency will become the cornerstone to build on and this will aid product delivery to the end users.

The removal of subsidies can promote economic efficiency by allowing market forces to determine prices and allocate resources more effectively.

When subsidies are in place, they can distort market signals, leading to inefficiencies and suboptimal resource allocation. By removing subsidies, the government can create an environment that encourages competition and innovation, driving economic growth in the long run.

That is just one way to look at it, according to economic analysts, the removal of subsidies will trigger a temporary spike in inflation as the prices of essential commodities rise. However, over time, the market will adjust to the new price equilibrium, and inflationary pressures may stabilize.

One of the primary concerns surrounding subsidy removal is its impact on low-income households. These households often heavily rely on subsidized goods for their daily needs.

When subsidies are removed, the cost of living may increase, posing challenges for vulnerable segments of society.

To counter this, the government is prepared to review several areas of the fiscal economy. The government is prepared to review the minimum wage and provide palliatives for the most vulnerable.

More importantly, the money recouped from subsidy will be reallocated into infrastructure development and social programs, fostering sustainable economic growth.

It might be hard at first, but we will cross this rubicon and the country will be better for it.

Frequently Asked Questions (FAQs)

1. When was fuel subsidy removed in Nigeria?

Contrary to popular opinion, the subsidy regime was ended by the assent to the Petroluem Industry Act by the then president, Muhammadu Buhari in February of 2022. However, the nation was not ready and the budgetary allocation continued into May of 2023 – the end of the Buhari administration.

2. How does subsidy removal impact inflation?

Subsidy removal can lead to short-term inflationary pressures as the prices of subsidized goods or services increase. However, over time, the market can adjust to the new price equilibrium, and inflation may stabilize.

3. Are there alternative measures to subsidy removal?

Yes, there are alternative measures that can be considered before resorting to subsidy removal. These include subsidy reforms, targeting subsidies to specific populations, improving subsidy delivery mechanisms, and implementing fiscal consolidation measures.

4. What are the potential social implications of subsidy removal?

Subsidy removal can have social implications, particularly for low-income households. The increased cost of living may pose challenges for vulnerable segments of society. However, by redirecting resources, the government can implement targeted social welfare programs to mitigate the adverse effects.

6. What are the long-term benefits of subsidy removal?

The long-term benefits of subsidy removal include improved fiscal sustainability, increased government revenue, reduced corruption opportunities, economic efficiency, and the reallocation of resources to critical sectors.

BIG STORY

Senate Warns Natasha Akpoti Against Planned Return To National Assembly, Says ‘It’s Premature’

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The senate has issued a warning to Natasha Akpoti-Uduaghan, representing Kogi central, advising her not to return to the national assembly until her suspension has been officially lifted.

On Saturday, Akpoti-Uduaghan declared her intention to resume legislative duties on Tuesday, stating that she had formally notified the senate in writing.

However, in a statement on Sunday, Yemi Adaramodu, who chairs the senate committee on media and public affairs, maintained that “no court order mandates the senate to reinstate the suspended lawmaker”.

Adaramodu emphasized the senate’s commitment to upholding due process and the principles of the rule of law.

According to the statement, “The senate of the Federal Republic of Nigeria wishes to reaffirm, for the third time, that there is no subsisting court order mandating the senate to recall Senator Natasha Akpoti-Uduaghan before the expiration of her suspension.”

It continued that the senate had already released two previous statements after the court’s ruling and the issuance of the certified true copy of the enrolled order, making it evident that there was no binding instruction compelling the senate to bring her back.

Instead, the court issued a suggestion encouraging the senate to consider adjusting its standing orders and reassessing the suspension, which it viewed as possibly excessive.

The court also ruled clearly that the senate did not violate any laws or constitutional provisions in imposing disciplinary measures due to the senator’s conduct during plenary.

The statement noted that the same court found Akpoti-Uduaghan guilty of contempt and imposed penalties, including a N5 million fine payable to the federal government and a directive to publish an apology in two national newspapers and on her Facebook page, which she allegedly has yet to do.

Adaramodu remarked that it was surprising and without legal basis for Akpoti-Uduaghan, while appealing and having filed a motion to delay the enforcement of those rulings, to act as if there is an existing recall order.

He cautioned that any move by her to return to the senate on Tuesday under a false assumption would be premature, disruptive, and violate legislative protocols.

He added that the senate would, when appropriate, review the court’s advice on amending its standing rules and addressing her recall, and communicate the outcome to her.

Until that time, she has been advised to remain away from the senate chambers and allow legal procedures to be completed.

On March 6, the senate suspended Akpoti-Uduaghan for six months for allegedly breaching its standing rules.

The suspension followed her accusation of sexual harassment against Senate President Godswill Akpabio, which she later pursued in court.

In July, the federal high court in Abuja ruled that the lawmaker should be reinstated, saying the length and manner of her suspension were too severe.

Nonetheless, the senate said it has not yet received the certified true copy of the judgment and would not take action without it.

Akpabio has filed an appeal to contest the court’s ruling.

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BIG STORY

Enugu Electricity Regulator Slashes Band A Tariff From N209 To N160/kWh

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The Enugu State Electricity Regulatory Commission has approved a reduced tariff for MainPower Electricity Distribution Limited, which replaced the Enugu Electricity Distribution Company. The Band A electricity tariff has been decreased from N209 per kilowatt-hour to N160 per kilowatt-hour.

The commission issued the directive over the weekend through a document labeled EERC/2025/003, titled “Tariff Order for MainPower Electricity Distribution Limited 2025.”

In a statement on Sunday, the regulator said the new rate, starting August 1, is based on actual costs and incorporates the federal government’s subsidy on electricity generation, which benefits consumers.

The commission stated that the decision aligns with the Enugu State Electricity Law 2023, which grants it the authority to oversee electricity generation, transmission, and distribution within the state.

“This law, signed by Governor Peter Mbah of Enugu state in September 2023, is pursuant to the 2023 Constitutional Amendment, which firmly established the legislative authority of the states on electricity matters within their states,” the statement reads.

“This was followed by the passage of the Electricity Act 2023, that repealed the Electric Power Sector Reform Act, 2005, and introduced major changes such as the separation of distribution and supply operations, and empowers states to regulate their own electricity markets.”

EERC TO MONITOR MAINPOWER TO ENSURE COMPLIANCE WITH NEW TARIFF

The regulator noted that it has set up monitoring and evaluation mechanisms as well as service standards to ensure that MainPower fulfills its service obligations and does not overcharge consumers for inadequate supply.

“MainPower is obliged to publish daily on its website a rolling seven-day average daily hours of supply on each Bank A feeder no later than 9am of the next day,” the commission said.

“Where MainPower fails to deliver on the committed level of service on Band A feeder for two consecutive days, MainPower shall report this to the Commission within 24 hours.”

The commission added that any Band A feeder that fails to meet the required service levels for seven straight days will be downgraded to reflect actual supply levels.

It stated its commitment to collaborating with “industry developers, investors, customers and Stakeholders to develop and implement strategies and solutions to provide access and improve electricity services to all the citizens of the state, as this is a win for the establishment”.

Chijioke Okonkwo, chairman of the EERC, said the tariff reduction followed a thorough review of MainPower’s license and pricing submissions, as it is a newly certified subnational operator in Enugu state.

“We reviewed their entire costs, using our Tariff Methodology Regulations 2024, and the supporting Distribution Tariff Model to get an average price of N94,” he said.

“The price is low because the Federal Government has been subsidising electricity generation cost which charges only N45 out of the actual cost of N112. That was how we came about the average tariff of N94 as cost reflective tariff at our level as a subnational electricity market.

“The actual PPA cost of any power purchase made by Mainpower out side the one subsidized by Federal Government, through the Nigerian Bulk Electricity Trader (NBET) will trigger automatic tariff adjustment to accommodate the PPA price because it will not be subsidized by the Federal Government.

“Breaking this across the various tariff bands means that Band A will be paying N160 while other Bands B, C, D, and E are frozen.

“Band A, at N160 will help MainPower to manage the rate shock, and if the subsidy is removed, the savings will assist them in stabilising the tariff over a defined period of time.”

According to Okonkwo, the tariff will always reflect actual costs and will not require any financial assistance from the state government.

He also stated that if the federal government stops subsidizing generation costs, the Band A tariff of N160 could become unsustainable, and prices might exceed the current rate.

Until that happens, he said it is appropriate that “Ndi Enugu – Band A customers” benefit from the lower tariff starting August 1.

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BIG STORY

NASS Showdown: Senate Draws Battle Lines Over Natasha’s Return

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The Senate has cautioned suspended Senator Natasha Akpoti-Uduaghan, who represents Kogi Central, against attempting to resume her legislative role on Tuesday by force.

Yemi Adaramodu, the Chairman of the Senate Committee on Media and Public Affairs, issued the caution in a statement released on Sunday.

Adaramodu emphasized that there is no legal directive currently requiring the Senate to reinstate Akpoti-Uduaghan immediately and reaffirmed the Senate’s commitment to legal procedures and the rule of law.

He stated, “The Senate of the Federal Republic of Nigeria wishes to reaffirm, for the third time, that there is no subsisting court order mandating the Senate to recall Senator Natasha Akpoti-Uduaghan before the expiration of her suspension.”

This clarification came in response to reports quoting Akpoti-Uduaghan as claiming she would return to the Senate based on a judgment by Justice Binta Nyako of the Federal High Court in Abuja.

Adaramodu explained that after the court decision and the issuance of the Certified True Copy of the enrolled order, the Senate had already clarified twice that the court did not issue any binding or compulsory instruction for her reinstatement.

He added, “Rather, the honourable court gave a non-binding advisory urging the Senate to consider amending its standing orders and reviewing the suspension, which it opined might be excessive.”

He further explained that the court had clearly ruled that the Senate had not violated any law or constitutional provision in suspending the senator for her conduct during plenary.

The Senate also pointed out that the same court found Akpoti-Uduaghan in contempt and penalized her with a fine of N5 million to be paid to the federal government, along with an instruction to issue public apologies in two national newspapers and on her Facebook page — a ruling she has reportedly not yet followed.

The Senate spokesperson added, “It is, therefore, surprising and legally untenable that Senator Akpoti-Uduaghan, while on appeal and having filed a motion for stay against the valid and binding orders made against her, is attempting to act upon an imaginary order of recall that does not exist.”

He cautioned that any attempt by Akpoti-Uduaghan to force her way back into the Senate next Tuesday under a false premise would be inappropriate, disruptive, and contrary to legislative protocol.

He added, “The Senate will, at the appropriate time, consider the advisory opinion of the court on both amending the standing orders of the Senate, her recall, and communicate the same thereof to Senator Akpoti-Uduaghan.”

“Until then, she is respectfully advised to stay away from the Senate chambers and allow due process to run its full course,” the statement concluded.

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