Effective from June 2022, Nigerians will have to pay more for fuel as the Federal Government is set to remove fuel subsidy.

Minister of Finance, Budget and National Planning, Zainab Ahmed, on Tuesday said Nigeria will remove fuel subsidy by 2022 and substitute the subsidy with N5000-a-month transportation grant to the poorest Nigerians.

Speaking on Tuesday at the launch of the World Bank Nigeria Development Update (NDU), the minister said the grant will be distributed to about 30 to 40 million Nigerians who make up the poorest population of the country.

The minister also disclosed that the total number of beneficiaries will depend on the resources available after the removal of the fuel subsidy.

Ahmed said this move is set for June 2022, but the Federal Government hopes to do this before June – in line with the Petroleum Industry Act (PIA).

She said: “The subsidies regime in the oil sector remains unsustainable and economically disingenuous.

“Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.

“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.”

In the development update, the World Bank had said the poorest 40 per cent in Nigeria consume less than 3 per cent of the total PMS in the country, amounting that the rich were benefiting more from the subsidies

“We are very optimistic that the recent developments in the oil sector, such as the Petroleum Industry Act (PIA) 2021, hopefully, the full reactivation of the four public refineries in the country, and the completion and coming on stream of the three private refineries under construction in 2022, would significantly boost contribution from the sector to our economic growth efforts,” Ahmed added.

“I agree with the Report that with the expansion of social protection policies during the pandemic, the government has an opportunity to phase out subsidies such as the PMS subsidy while utilizing cash transfers to safeguard the welfare of poor and middle-class households.”