The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed has disclosed that the Federal Government will spend a whopping N3.24 trillion on petrol subsidy for the 2022 fiscal year.
Mrs. Ahmed made the disclosure while speaking with State House Correspondents after the week’s Federal Executive Council (FEC) meeting at the Presidential Villa, Abuja.
The Minister said the sum goes by a petrol subsidy of N270 billion per month based on the projection submitted by the Nigerian National Petroleum Company (NNPC) Limited.
NNPC had submitted the projection after the government announced that petrol subsidy removal will be suspended.
News Band had reported that the government suspended the removal of fuel subsidy after massive uproar from Nigerians from various quarters.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, said that it is clear that it is not possible to remove subsidy on petroleum products due to some impediments.
He said this during a meeting with Senate President Ahmad Lawan on Monday in Abuja over the planned removal of subsidy on petroleum products.
Making clarifications while speaking to newsmen, the Minister of Finance, Budget and National Planning said that N443 billion was budgeted for subsidy from January to June but will have to be increased and sourced.
She noted that FEC has approved a proposed amendment to the 2022 Budget to accommodate the additional subsidy funding.
She said: “We presented to council a request for consideration to make additional funding provisions to enable us to meet incremental fuel subsidy request in the 2022 Budget.
“In the 2022 Budget, as appropriated, we made a provision of N443 billion for subsidy for January to June.
“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.
“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.”
On how the N3 trillion for subsidy will be sourced, the minister said:
“We’re going to engage NNPC to further interrogate the request that they presented to see how we can scale it down.
“We agreed with the view of governors, that there is a need to scale down on the size.
“Even as the government is not immediately removing the fuel subsidy, we have to make sure that what the nation is incurring is efficient, and that it is a real cost that has been consumed by the country.
“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. This is just the second day.”
In the meantime, state governor have criticised the N3trillion for subsidy as unsustainable, saying the government should stop behaving like Father Christmas.
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