A day after the federal government announced its plan to delay implementation of the Petroleum Industry Act (PIA) and retain payment of petrol subsidy for 18 months, the government yesterday approved N3 trillion for the new subsidy regime. The Federal Executive Council (FEC) approved the sum at its weekly meeting in Abuja.
The N3 trillion now budgeted to sustain the payment of subsidy in 2022 alone, amounts to 17.5 per cent of the total of N17.126 trillion 2022 budget that was signed into law on the last day of 2021. Already, the approved 2022 budget has a deficit of N6.39 trillion, which is 37 per cent of the N17.126 trillion. This is a clear indication that the government may borrow more this year than it had earlier projected.
The N3 trillion approved by FEC is 55 per cent and 43 per cent of the capital component and recurrent expenditure of the 2022 budget, respectively.
Implementation of the PIA, which stipulates the removal of petrol subsidy, was initially meant to commence in February 2022, but it was later shifted to July 2022. However, due to pressure and threat of protest by the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), the removal of subsidy was suspended on Monday.
But NLC, Lagos chapter, yesterday criticised the federal government’s decision to recommend an 18-month extension of the PIA to the National Assembly.
On its part, the Independent Petroleum Marketers Association of Nigeria (IPMAN) urged the federal government to introduce palliatives to cushion the effect of subsidy withdrawal, irrespective of the postponement of the policy, as well as fix all the country’s refineries.
Meanwhile, Chairman of the Nigeria Governors Forum (NGF) and governor of Ekiti State, Dr. Kayode Fayemi, said only about eight states were presently benefitting directly from petrol subsidy. Fayemi said this at a joint meeting between the state governors, NLC, and TUC over the fuel subsidy withdrawal.
FEC yesterday mandated the Finance, Budget and National Planning Ministry to reconcile the fuel subsidy budget with the Nigerian National Petroleum Company (NNPC) Limited, which prepared the estimate.
The council meeting presided by President Muhammadu Buhari also okayed the preparation of the 2022 Supplementary Budget, which would include the repeal of Clauses 10 and 11 of the Appropriation Act as well as incorporation of N103 billion removed by the lawmakers from the initial budget estimates, for submission to the National Assembly for approval.
The decisions reached at the virtual FEC meeting were made public by the Minister of Finance, Budget and National Planning, Zainab Ahmed, who briefed newsmen after the meeting.
Ahmed said a memo in respect of the additional funding provisions to enable government meet the incremental fuel subsidy request in the 2022 budget was presented for the council’s consideration.
She said only N443 billion had been provided for in the 2022 budget to accommodate subsidy from January to June, but taking the prevailing economic realities, both locally and globally, into consideration, FEC proposed a year-long provision for the subsidy.
Ahmed said the request was considered by the council, which directed the ministry to approach the National Assembly for an amendment to the fiscal framework as well as the budget.
The minister explained, “You would recall that in the 2022 budget, as appropriated, we have made a provision of N443 billion for subsidy for January to June. Having taken into account the current realities: increased hardship in the population, heightened inflation, and also 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 desirable to exit fuel subsidy.
“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.”