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Nigeria’s Representatives reject Goodluck Jonathan’s fuel subsidy removal

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Nigeria’s House of Representatives have voted in favour of throwing out President Goodluck Jonathan’s subsidy removal clause from the government’s expenditure proposals for 2012 to 2014. , the Daily Trust reported Friday, December 2, 2011

According to the publication, Jonathan plans to end fuel subsidies beginning from January 2012 to save billions of naira for development projects, but this has been facing stiff resistance from labour unions and parliamentarians.

The 2012-2014 Medium Term Expenditure Framework (MTEF) bill containing the subsidy removal proposal according to the publication, passed through second reading in the House on October 19 and was referred to a joint committee for further legislative work.

The joint committee on Finance, Appropriations, Legislative Budget and Research, and National Planning and Economic Development, described the planned removal as “premature,” the publication said.

“The proposal on fuel subsidy removal as contained in the revised Fiscal Strategy paper is premature. Sources other than relying on savings from proposed subsidy removal as part of financing items for expected deficit should be explored,” the Daily Trust quoted the committee’s report as saying.

In Ghana however, according to the National Petroleum Authority (NPA), because Ghana has a full cost recovery mechanism which is based on import parity, the government of Ghana  subsidises petroleum products.

The NPA reports that, each time prices of crude oil were above a certain threshold, the government pays the difference as subsidy.

There are taxes and levies that are mentioned in the Price Build Up (PBU) although Ghana’s maximum taxes are between 10 and 14 per cent, sometimes the country records negative taxes due to the huge subsidies on products like kerosene premix and Liquefied Petroleum Gas (LPG).The government gets some revenue about Gh¢150 to Gh¢175 from tax revenue, the NPA says.

According to Kwame Okyere-Mensuo, Technical Adviser at the Ministry of Finance and Economic Planning (MoFEP), with the success of the hedge programme so far, Ghana’s Finance Minister, Dr. Kwabena Duffuor has used some of the gains made, in lieu of subsidies.

By Pascal Kelvin Kudiabor

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