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2022 Budget: One Major Thing That Might Happen As FG Is Set To Remove Electricity, Petrol Subsidies

A report from The Guardian revealed that plans are being made by the Muhammdu Buhari-led federal government to remove subsidies on electricity and petrol in 2022.

This was made known by Nigeria's Minister of Finance, Budget, and Planning, Dr. Zainab Ahmed on Friday, in Abuja.

Ahmed explained that the removal of the subsidies on electricity and petrol was a result of the government's decision to deal with the issue of leakages in the country's revenue. She insisted that for the government to achieve the main objectives of the 2022 budget, It must take urgent, bold, and decisive decisions, adding that the Muhammadu Buhari administration is determined to take necessary actions in that regard.

President Buhari delivering the proposed budget to the National Assembly. Credit: Google.

While the government needs to do what it takes to ensure it achieves the required results highlighted in the 2022 budget, it is necessary, however, to look at one major thing that might happen if the federal government removes subsidies on petrol and electricity.

The removal of subsidies might lead to a higher level of inflation on goods and commodities in Nigeria.

The removal of subsidies on petrol and electricity might lead to a higher level of inflation on commodities than the one already being witnessed in Nigeria. The inflation rate in the country is currently 17.38 percent (August 2021) and this figure might go up even further should the subsidies be removed.

Recall that earlier this year the electricity tariff was increased in various parts of the country, leading to protests from Nigerians who felt it was not the proper time for the government to do it. With the removal of the subsidies, there might be another increment as the Electricity Distribution Companies will look for ways to cushion the effect of the government's actions.

New Electricity Tariffs Implemented in April 2021. Source: The Cable.

Also, the cost of Premium Motor Spirit (PMS) would likely witness an increase in prices if the government follow up on its decision to remove subsidies. This will further affect the cost of consumer goods and commodities in the country as the current pump price of petrol stands at N160 per liter.

Image Credit: Google.

While the Buhari regime needs to take the steps to enable it to run the country smoothly in 2022, it is also important for it to find ways to ensure that the common man in Nigeria is shielded from the harsh realities of these decisions. Hopefully, that would be the case.

What are your thoughts on the government's decision to remove subsidies?

Please drop your comments below.

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Abuja Ahmed Muhammadu Buhari Nigeria The Guardian

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