Fuel Subsidy Is Estimated At N6.72tn For 2023 – Finance Minister
The Federal Government on Thursday projected to spend N6.7 trillion on petrol subsidy payments in 2023.
Subsidy or under-recovery is the underpriced sales of premium motor spirit (PMS), better known as petrol.
Speaking at the presentation of the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper (MTEF&FSP) in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said subsidy payment projection is based on two prevailing scenarios — business-as-usual or reform.
“Scenario 1 is the Business-as-Usual. This is assuming that the subsidy on PMS, which is estimated at N6.72 trillion for the full year 2023, will remain and be fully provided for,” she said.
“Scenario 2 – the Reform scenario: This assumes that petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for.”
She, however, said both scenarios have implications for net accretion to the federation account and projected deficit levels.
According to the Minister, the Federal Government has recorded a N2 trillion budget deficit between January and April.
She explained that the deficit further highlights the fiscal challenges confronting the current administration.
Ahmed also said that the Nigerian National Petroleum Company Limited which has funded the fuel subsidy until June will henceforth leave that responsibility to the federation, an action she said will create a strain on the economy.
In January, the Federal Government postponed the planned petrol subsidy removal for 18 months, citing “high inflation and economic hardship”.
The Minister of Information and Culture, Lai Mohammed, had told Nigerians that many other countries had also introduced measures to help citizens cope with high oil energy prices due to the Russia-Ukraine war.
“When you consider the chaos, the social disharmony and… instability such an action (of abolishing subsidies) would facilitate, is it worth it? I don’t think so,” Mohammed had said.