The Presidential Economic Advisory Council has asked the President, Major General Muhammadu Buhari (retd.), to remove subsidy on petrol and adopt a pricing regime that reflects the cost of the commodity.

Buhari had in 2019 set up the council chaired by Prof Doyin Salami to replace the regime’s defunct Economic Management Team led by Vice-President Yemi Osinbajo.

The council, charged with the responsibility of advising the President on economic policy matters including fiscal analysis, economic growth and a range of internal and global economic issues working with the relevant cabinet members and heads of monetary and fiscal agencies, reports directly to Buhari.

Its advice that petrol subsidy be removed formed part of its presentation at its sixth regular meeting with the President last Friday, when it also warned that the subsidy regime would worsen solvency of state governments.

According to the document presented at the meeting, the council drew Buhari’s attention to three issues that it said required urgent attention.

They include the need for policy clarity with regard to fuel subsidies which it said would help resolve the dilemma which rising crude oil prices present; the worsening security environment which it said had adversely affected food production leading to higher prices; and the need for the Petroleum Industry Bill to encourage investment in Nigeria’s oil and gas sector.

The council noted that improving crude oil prices had led to what it called the Nigerian ‘dilemma.’

The dilemma, it said, resulted from the conflicting implications of higher crude oil prices on the nation’s economy.

According to the council, rising crude oil prices improve public sector revenue and reserves of foreign currency while higher crude oil prices mean that the cost of imported petrol should be higher than the N167/litre being paid at filling stations.

It noted that the restoration of subsidies created a set of significant problems. It added that as there was no provision for subsidy payments in the 2021 budget, such payments would have to be done by the Nigerian National Petroleum Corporation thereby further reducing revenues accruing to the Federation Account.