A whopping N3 trillion would be required for petrol subsidy in 2022, the federal government has said. Zainab Ahmed, the minister of Finance, Budget and National Planning disclosed this on Wednesday while speaking to State House Correspondents after the weekly Federal Executive Council, FEC meeting held at the Presidential Villa, Abuja.
She spoke barely 48 hours after the Buhari administration said it has rescinded its earlier decision to end the fuel subsidy regime. With the new development, it’s estimated that N270 billion will be spent monthly on petrol subsidy for the next 18 months after which the government will now decide on the final decision to take on the issue.
The minister said the government’s decision to put the removal on hold is based on prevailing situation.
For instance, the Nigerian Labour Congress, NLC had warned that its members will embark on strike if the federal government went ahead to remove petrol subsidy.
The magazine also learnt that the failures by government officials to reach a decision on the removal forced the administration to change its mind after it earlier said the regime will end by July this year.
While President Buhari is said to have disagreed with his cabinet to remove subsidy, the National Assembly is said not to be in support of removing subsidy.
Recall that Senate President Ahmed Lawal said last week after meeting President Buhari in Aso Rock Villa, Abuja that subsidy removal will make life unbearable for many Nigerians.
But speaking on Wednesday, Ahmed said the federal government has decided to allow for enough time to be able to reach a final decision on the matter with other stakeholders.
Ahmed said, “having taken into account the current realities, increased hardship on the population, heightened inflation, and that the measures that needed to be taken to enable a smoother exit from the fuel subsidy are not yet in place, it was agreed by Council that it is undesirable to exit fuel subsidy now.
“The NNPC has presented to the ministry a request for N3 trillion as fuel subsidy for 2022.
“What this means is that we have to make an incremental provision of N2.557 trillion to be able to meet the subsidy requirement, which is averaging about N270 billion per month.
“In 2021, the actual under-recovery that has been charged to the Federation was N1.2 trillion, which means an average of N100 billion.”
She explained that the implication for not removing subsidy is that the government will require N3 trillion to continue to subsidize petrol for Nigerians this year alone.
According to her, “in 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because NNPC assesses that the country is consuming 65.7 million litres per day, now we’ll end up with the incremental cost of N3 trillion in 2022.”
“So, this has been considered by Council and we’ve also been asked to approach the National Assembly for an amendment to the fiscal framework as well as the Budget, to also further discuss with NNPC on how to make provisions for this and also how to rationalise this expenditure.”
She said the huge task before government now is how to reduce the N3 trillion subsidy.
Zainab said, “how do we fund it? We’ll have to reduce it from that N3 trillion. Secondly, we have several reconciliations with NNPC and NNPC itself is owing (the government) in some cases. We want to be able to settle some of the subsidy costs through this reconciliation process.
“When we’re done with that, whatever is left that we’re not able to apply to what an NNPC is owing the Federation will not be increasing the deficit, That means increased domestic borrowing. But we haven’t finished the reconciliation,” the minister said.
Discover more from The Source
Subscribe to get the latest posts sent to your email.
