Zainad Ahmed, the minister of Finance has disclosed that the federal government will borrow to fund petrol subsidy in this year’s budget. President Muhammadu Buhari had two weeks ago sent a bill to the National Assembly for the Amendment of the 2022 Budget to accommodate the over N2 trillion provided in the budget for fuel subsidy.
Last week, the minister said the federal government has totally removed electricity subsidy, noting that plans are in the offing to remove petrol subsidy in phases beginning from this year.
The deadline for removing petrol subsidy was initially set for July this year, but had to be moved forward after the presidency and National Assembly disagreed on the issue.
The minister however said on Tuesday that the subsidy will be funded from the $ 2.2 billion Eurobonds the federal government is planning to raise within the year.
Zainab said there is no other potion left for the government to get fund for the growing petrol subsidy which has been on astronomical rise since President Buhari came to power in 2015.
According to her, “Rising oil prices have put us in a very precarious position … because we import refined products … and it means that our subsidy cost is increasing.”
Speaking at the virtual meeting of African Finance Ministers and the International Monetary Fund, last Thursday, Zainab said this year’s had been prepared to accommodate the incremental removal of petrol subsidy, adding that the government had to carefully adjust the prices incrementally at some levels.
She said, “we are cleaning up our subsidies. We had a setback; we were to remove fuel subsidy by July this year but there was a lot of pushback from the polity.
“We have elections coming and because of the hardship that companies and citizens went through during the COVID-19 pandemic, we just felt that the time was not right, so we pulled back on that,” Ahmed said.
“But we have been able to quietly implement subsidy removal in the electricity sector and as we speak, we don’t have subsidies in the electricity sector.
“We did that incrementally over time by carefully adjusting the prices at some levels while holding the lower levels down.”
The minister said petrol subsidy remained a huge problem for the government that it will have to be removed at a point whether Nigerians like it or not.
She explained that talks are in top gear with the national Assembly to ensure that petrol subsidy is totally phased out, noting that this must be done to reduce the yearly budget subsidy to the barest minimum.
“We are currently doing a budget amendment to accommodate incremental subsidy (removal) as a result of the reversal of the decision and we want to cap it at that.
“Hopefully, the parliament will agree with us and we are able to continue with our plan for subsidy (removal) otherwise the way things are going we will not be able to predict where the deficit will be as a result of the fluctuation in the global market,” the minister said.
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