Petrol Subsidy Is Unsustainable, Says Buhari In Last Budget Presentation


 

President Muhammadu Buhari on Friday pushed for the removal of fuel subsidy in 2023, saying that the policy is not sustainable considering current economic realities.

He shared the position while presenting a N20.51 trillion 2023 budget proposal to the National Assembly.

He said, “Petrol subsidy has been a recurring and controversial public policy issue in our country since the early eighties.

“However, its current fiscal impact has clearly shown that the policy is unsustainable. As a country, we must now confront this issue taking cognizance of the need to provide safety nets to cushion the attendant effects on some segments of society.”

READ ALSO: Oil Thieves Are Nigeria’s ‘Worst Enemies’ – Lawan

According to the President, discontinuing the policy is necessary for the country to manage limited resources.

“As we seek to grow our government revenues, we must also focus on the efficiency of utilization of our limited resources,” he said.

“Critical steps we are taking include immediate implementation of additional measures towards reducing the cost of governance and the discontinuation of fuel subsidy in 2023 as announced earlier.”

The President, however, hinted that provisions would be made to cushion the effects of subsidy removal.

“We are however mindful of the fact that reducing government spending too drastically can be socially destabilizing, and so will continue to implement programmes to support the more vulnerable segments of society,” he said.

The N19.76 trillion proposed for the 2023 budget represents a 15.37 percent increase on the 2022 budget.

‘Greatest Threat To Fiscal Viability’

In reviewing recent economic developments, the President warned of the dangers of revenue shortfalls.

“Mr. Senate President and Rt. Honourable Speaker, revenue shortfalls remain the greatest threat to Nigeria’s fiscal viability,” he said.

To check that threat, he explained that the Federal Government has accelerated efforts towards ensuring that all taxable Nigerians declare income from all sources and pay taxes due to the appropriate authorities.

He added, “We are also monitoring the internally generated revenues of MDAs to ensure they are appropriately accounted for and remitted to the Consolidated Revenue Fund.

“The 50 percent cost-to-income ratio in the Finance Act 2020 has significantly improved operating surplus remittances by Government Owned Enterprises (GOEs).”

He called on the National Assembly to continue cooperating with the Federal Government in enforcing the legal provision and other prudential guidelines imposed on the GOEs during the consideration of the budget proposals of the GOEs.

Efforts to tackle the threat of revenue shortfalls are already working, according to the President.

“I am happy to report that the revenue collection and expenditure management reforms we are implementing are yielding positive results, with recent significant improvements in non-oil revenue performance,” Buhari said.

“However, while we continue to implement revenue administration reforms and improve our collection efficiency, we urgently need to find new ways of generating revenue.”

Budget Chief Decries Waste In Govt, Advocates Petrol Subsidy Review

A file photo of an attendant filling the fuel tank of a car.

 

The Director-General, Budget Office of the Federation, Ben Akabueze, has decried what he described as waste in government, advocating for the review of the fuel subsidy.

Akabueze, who spoke during an interview on Channels Forum, a Channels Television special to mark Nigeria’s 62nd Independence anniversary, said the government’s spending on subsidies has been gulping a lot of resources after the personnel cost and debt servicing.

READ ALSO: Petrol Will Cost ₦462/Litre Without Subsidy, Says NNPCL

He advised President Muhammadu Buhari’s administration to prioritise on its spending while cutting down on some unnecessary waste.

The Director-General, Budget Office of the Federation, Ben Akabueze, speaks on Channels Forum, a Channels Television special to mark Nigeria’s 62nd Independence anniversary on October 1, 2022.

 

“We need to take a hard look at the petrol subsidy that is the single largest item of expenditure after personnel cost and debt service for the Federal Government,” Akabueze said.

“There are some wastes that we still need to cut. We need to do the job of prioritising how we spend the limited resources that are available.”

He also denied insinuations that the government is spending too much money, saying the current administration needs to explore more ways of generating revenue.

According to Akabueze, the country’s infrastructure faces a significant deficit, with many public services suffering.

“Our problem is not that the government is spending too much money. The truth is that the government is not spending enough money and the numbers are there to show.

“The public expenditure to GDP ratio is at the bottom even on the African continent and that is why public services are suffering whether in health or education. The infrastructure faces a significant deficit. It is however correct that we can be more efficient in our expenditure,” the accountant added.

Akabueze’s comments come a month after Minister of Finance, Zainab Ahmed, presented the government’s proposal of spending N3.36 trillion on petrol subsidy in 2023.

Zainab who appeared before the House of Representatives Committee on Finance in Abuja on August 29, reiterated petrol subsidy will remain in place until mid-2023.

She explained the Federal Government is proposing an aggregate expenditure of N19.76 trillion for the 2023 financial year, with a projected deficit of N11.30 trillion.

Fuel Prices Jump In Kenya After Subsidies Cut

A file photo of a fuel nozzle.

 

Fuel prices in Kenya surged to record highs on Thursday after the new government slashed subsidies, piling on the misery for a population already facing deep economic hardship.

The price of petrol increased by 20 shillings to 179.30 (about $1.50) per litre while diesel and kerosene prices are up by 20 and 25 shillings respectively, the Energy and Petroleum Regulatory Authority (EPRA) said.

The new price regime that will remain in force until October 14 was announced shortly after Kenya’s new President William Ruto took office on Tuesday vowing to scrap food and fuel subsidies.

“The interventions in place have not borne any fruit,” Ruto said in his inauguration speech.

Kenya is reeling from the global surge in crude oil prices and last year introduced measures to cushion consumers from the high retail prices.

It has so far spent 144 billion shillings ($1.2 billion) — about 86 percent of tourism earnings this year — to subside fuel, according to government figures.

Ruto lambasted the policies of his predecessor Uhuru Kenyatta, saying they gobbled up billions of shillings with no impact.

“In addition to being very costly, consumption subsidy interventions are prone to abuse, they distort markets and create uncertainty, including artificial shortages of the very products being subsidised,” he said.

READ ALSO: Ruto Sworn In As Kenya’s President After Divisive Poll

Under the new prices announced by EPRA, the subsidy for petrol has been removed while those for diesel and kerosene have been reduced.

Kenya is the most dynamic economy in East Africa but many are suffering financial hardship with about a third of the population living in poverty.

Prices for basic goods skyrocketed in the wake of Covid pandemic and the war in Ukraine, and unemployment remains a major problem, particularly among the young.

Inflation soared to a 65-month high of 8.5 percent in August, while the currency is at record lows at around 120 shillings to against the dollar.

There are fears the new fuel price increases could see public service providers hike fares and further add to cost of living pressures.

AFP

Subsidy: Reps Give Finance Minister A Week To Honour Invitation

A file photograph of Finance Minister, Zainab Ahmed.
A file photograph of Finance Minister, Zainab Ahmed.

 

The House of Representatives’ adhoc committee on subsidy regime has issued a one-week ultimatum to the Minister of Finance

The committee gave the ultimatum after the minister failed to honour its invitation but instead sent a representative.

READ ALSO: Buhari Okays Seplat’s Acquisition Of Exxon Mobil Shares

The lawmakers are, among other things, investigating the total amount released from other accounts for subsidy other than the consolidated revenue account.

The committee is also requesting for a list of the beneficiaries of the subsidy payments.

This was stated by the Committee Chairman, Ibrahim Aliyu.

Fuel Subsidy Is Estimated At N6.72tn For 2023 – Finance Minister

(File) Nigeria’s Minister of Finance, Budget, and National Planning, Zainab Ahmed the borrowings are within “sustainable limits.”

 

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.

READ ALSO: 2022 Budget: FG Has Released N4.7trn To Finance Expenditure So Far – Zainab Ahmed

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.

Reps To Investigate Subsidy Regime From 2017 To 2021

A file photo combination of members of the House of Reps during a plenary and a fuel nozzle.

 

The House of Representatives on Wednesday resolved to set up an ad-hoc committee to investigate the petroleum products subsidy regime from 2017 to 2021.

The resolution followed a motion by Honourable Sergius Ogun who stated that component costs in the petroleum products subsidy value chain claimed by the Nigerian National Petroleum Corporation (NNPC) is highly over-bloated while the transfer pump price per litre, used by the NNPC in relation to Petroleum Pipeline Marketing Company (PPMC), is underquoted.

The lawmaker described this as fraudulent while also expressing worry that the subsidy regime has been used by the NNPC and other critical stakeholders to subvert the nation’s crude oil revenue to the tune of over $10 billion.

The committee is to report back to the House within eight weeks for further legislative action.

READ ALSO: Why FG Cannot Introduce Subsidy On Diesel – NNPC Boss

Wednesday’s move by the lawmaker came on the same day that the Chief Executive Officer (CEO) Mele Kyari ruled out the possibility of a subsidy for diesel.

He made the comments while appearing before the House of Representatives Committee on Downstream, alongside the CEO of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, among others.

“In our country today, we do not produce AGO and we regret that our refineries are not working,” he said. “Are we doing anything about it? Yes. I have heard the honourable members lamenting; yes, they (the refineries) are not working.

“This is the truth. I don’t want to bore you with why they are not working, but they are not working; I admit they are not working but we regret it. I will invite this committee at your convenience to join us to see how much work we have done to get them back to work, but they will not come back tomorrow.

“They will not! You cannot start it tomorrow. We regret this; we regret this situation, and we are doing everything possible. As a matter of fact, we have decided to do a quick fix for the Warri refinery. The reason is very simple: we don’t even want to go the long route of doing comprehensive turnaround maintenance because we are concerned.”

Buhari Writes Reps, Seeks Approval of N4trn As Petrol Subsidy For 2022

A file photo of President Muhammadu Buhari used to illustrate the story.

 

President Muhammadu Buhari is seeking an increase in the provision for petrol subsidy for 2022 from N442 billion to N4 trillion. 

The Nigerian leader has therefore written to the House of Representatives for a review of the 2022 fiscal framework.

The Speaker of the House of Representatives, Femi Gbajamila, read the letter, titled “Submission of the Revised 2022 Fiscal Framework” during plenary on Thursday. 

Buhari in the letter dated April 5, cited the rising market price of crude oil heightened by the Russian-Ukraine war.

“As you are aware, there have been new developments both in the global economy as well as in the domestic economy which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 Budget was based,” he said.

“These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.”

READ ALSO: Buhari Redeploys Mohammed Abdullahi As Minister Of Environment

According to him, the adjustments to the 2022 fiscal framework include a rise in the estimated crude oil price benchmark from $62 per barrel to $73 per barrel. 

“A reduction in the projected oil production volume by 283,000 barrels per day, from 1.883 million barrels per day to 1.600 million barrels per day,”  Buhari’s letter read. 

‘70 Million Litres Is Impossible’: Saraki Challenges FG On Fuel Consumption Claims

 

Former Senate President, Bukola Saraki, has faulted the Federal Government’s claims that the country is consuming over 70 million litres of fuel.

He disputed the claims during his appearance on Channels Television’s Sunday Politics while addressing the issue of fuel scarcity and the suffering it brought upon Nigerians.

Read Also: What Buhari Said About Fuel Subsidy In Proposed Amended 2022 Budget (FULL TEXT)

“If you remember then in 2011 when I moved the motion, we talked about how we were consuming 30 to 35 million litres a day and we said at that time that it was even too much.

“We took steps and made recommendations following my motion and the then-government took certain steps that resulted in the government seeing a reduction in subsidy by $500 million… now to say today that we are spending three trillion, is definitely not adding up.

“How can anybody see Nigerians go through this? Now I’m told that we consume 70 million litres. It’s not possible.

“We cannot be consuming more than 30-45 million litres. There’s no doubt that those litres of fuel are going across the border and the government is turning a blind eye. It is not possible,” he asserted.

NNPC Has Requested N3trn As Fuel Subsidy For 2022 – Finance Minister

A file photo of an attendant filling the fuel tank of a car.

 

The Nigerian National Petroleum Corporation has requested the sum of three trillion naira (N3,000,000,000,000) as fuel subsidy for 2022.

Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, disclosed this to State House correspondents after the Federal Executive Council meeting which was chaired by President Muhammadu Buhari on Wednesday.

“In 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because NNPC’s assessment is that Nigeria is that the country is consuming 65.7 million litres per day, that we would end up with an incremental cost of N3 trillion in 2022,” the minister added.

According to Mrs Ahmed, by implication, the Federal Government will have to make an incremental provision of N2.557 trillion in order to meet subsidy requirements which currently averages about N270 billion per month.


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Buhari Never Directed Removal Of Petrol Subsidy, Says Lawan


 

The finance minister further disclosed that only N443 billion is presently available in the 2022 budget meant to accommodate subsidy from January to June.

She also stated that the current realities on the ground including lack of structures, for now, has necessitated the NNPC to make the request.

That request, she revealed, was considered by the council, which has directed the ministry to approach the National Assembly for an amendment to the fiscal framework as well as the budget.

APC Welcomes Suspension Of Petrol Subsidy Removal

No Need For Panic Buying, Over 1bln Litres Of Petrol In Stock – NNPC
File photo

 

The All Progressives Congress (APC) has welcomed the Federal Government’s suspension of the planned removal of subsidy on petroleum products.

According to a statement by the APC, it is commendable that the Federal Government took into consideration the fact that the removal of subsidy at this time will heighten inflation and cause undue hardship on the citizenry.

While asserting that programmes and policies of government are meant to benefit the people, the APC said that if the timing of the planned subsidy removal would cause hardship on citizens, then a review was necessary.

READ ALSO: FG To Make Additional Provisions For Fuel Subsidy Beyond June – Finance Minister

“We commend President Muhammadu Buhari for always putting the welfare and well-being of Nigerians first as he has serially displayed in the implementation of programmes and policies of this administration.

“In line with the new Petroleum Industry Act (PIA), the Federal Government is already putting in place measures, particularly boosting our local refining capacities to reduce the country’s reliance on expensive import of refined petroleum products.

“This will in due course usher in the eventual and full deregulation of the country’s petroleum sector”.

The APC commended the cordial and healthy relations between the executive and the 9th National Assembly which it says has ensured good governance.

“Nigerians have been the ultimate beneficiaries as displayed in the positive outcomes of the meeting between Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, and the Senate President, Ahmad Lawan on the suspension of the planned subsidy removal,” the party added.

NEC Asks Nigerians To Wait Till June For Decision On Subsidy

 

The National Economic Council (NEC) has asked Nigerians to wait till June for a decision to be reached on the removal of fuel subsidy.

Nasarawa State Governor, Abdullahi Sule, said this while briefing the press at the end of the first NEC meeting for 2022 held in Abuja on Thursday.

“We did not make any presentation on this because there has not been a decision. But in reality, all of us, Nigerians, know that there is now the Petroleum Industry Act (PIA) and NNPC has now become a limited liability company,” the governor said after the 122nd NEC meeting.

“So, NNPC will run differently. So, if the Ministry of Finance provides for six months, you probably can understand part of the reasons for the provision of six months is before NNPC fully takes off and at that moment, that’s when decisions would be made.”

Governor Godwin Obaseki of Edo State, who also spoke after the meeting, noted that N2.1 trillion was spent last year on fuel subsidy payments. The payments, he said, could have been used to fund other development efforts.

“Because of payment of subsidy, NNPC was unable to put that money into FAAC for distribution, which means less money going to the states and less money going to the federal government,” Obaseki added.

The NEC meeting was chaired by Vice President Yemi Osinbajo and attended physically by state governors, government officials as well as officials of the World Bank.

Also on the agenda was the launch of the Nigeria COVID-19 Action Recovery and Economic Stimulus programme (NGCARES).


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Buhari Never Directed Removal Of Petrol Subsidy, Says Lawan

Removing Fuel Subsidy Will Push More Nigerians Into Poverty – Abdulsalami


Pushing Millions Into Poverty

General Abdulsalami Abubakar, a former Head of State, is the Chairman of the National Peace Council.
General Abdulsalami Abubakar, a former Head of State.

 

NEC’s comment is the latest in the debates over plans to remove subsidies on fuel.

On the same day, a former Head of State, Abdulsalami Abubakar, said a hike in fuel price will push millions of Nigerians into hardship.

Abdulsalami made the comment during the 19th Daily Trust Summit held in Abuja and noted that Nigerians are already facing hardship on multiple fronts.

“All of these have disrupted the fragile value chains across the country, and negatively impacted the ability of Nigerians to produce, process, and distribute food,” he said, months after the Federal Government disclosed it will remove subsidy.

“The result is a continued rise in the prices of food items, beyond the reach of many Nigerian families.

“On top of all these, fuel prices are expected to rise significantly in the coming months as announced last November by the NNPC. We all know when this happens, as the government has planned, it will push many millions deeper into poverty.”

The plan to remove subsidy has also gotten pushbacks from the organised labour who argue that it is ill-advised with the minimum wage pegged at N30,000.

Late last year, the National Association of Nigeria Students (NANS), had also warned that it will shut down the country if the Federal Government removes subsidy which will see fuel go for about N320 per litre.

“Nigeria will be shut down should the Federal Government attempt to remove the fuel subsidy as allegedly being proposed,” NANS President, Adedayo Asefon said.

“It is merely an attempt to add a new dimension of economic woes upon Nigerians through this removal of fuel subsidy.”

But the Nigerian government has insisted it can no longer continue paying subsidies for fuel which, according to President Muhammadu Buhari, take a huge chunk of revenue.

 “Today, we have 60 per cent less revenues; we just cannot afford the cost. The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration,” Buhari stated at the first-year Ministerial Performance Review Retreat held in September.

In lieu of the subsidy, the government also plans to give a N5, 000 transport grant to about 40 million poor Nigerians to cushion the impact.

However, the Senate President, Ahmed Lawan, said on Tuesday that Buhari did not direct the removal of subsidy.

“He didn’t tell anybody that we should go remove petroleum subsidy. And those of us who represent the people know how people are already stressed over and again . . . it is going to be too much for them,” Lawan said after a meeting with the Nigerian leader.

Buhari Never Directed Removal Of Petrol Subsidy, Says Lawan

A file photo of an attendant filling the fuel tank of a car.

 

The Senate President, Ahmed Lawan on Tuesday said that President Muhammadu Buhari has not directed anyone in his administration to implement the removal of petroleum subsidy.

He stated this after meeting with the President in his office, disclosing that he met Buhari to convey the concerns of his constituents on various issues including the proposed removal of subsidy.

Briefing State House correspondents in Abuja, the Senate President said that lawmakers are worried about the agitations and protests across the country on the matter, which prompted the discussion with the President.

READ ALSO: Work Ongoing On Review Of 1999 Constitution – Lawan

“He didn’t tell anybody that we should go remove petroleum subsidy. And those of us who represent the people know how people are already stressed over and again . . . it is going to be too much for them,” Lawan said.

Lawan further questioned the claim that Nigerians consume a hundred million litres of the Premium Motor Spirit (PMS) daily.

The Senate President explained that while it is impossible to consume that much within the boundaries of the country alone, there is a need to critically investigate to discover the truth.

Speaking further, he blamed the smuggling of petroleum products on the failure of the government to contain the menace, a situation that has pushed the burden of payment on the ordinary citizen.

He said, “I know and I agree that the subsidy is very heavy. But I think we must never transfer the burden to the citizens. I believe that we need to look at the quoted figure of maybe 100 million liters that people claim we’re consuming.

“Is it real? I mean is it either under-recoveries of subsidy? Is it really 100 million liters per day? How on earth are we consuming that? We need to look at this critically and see how we can find the truth.

“I am not convinced that within the boundaries of Nigeria we are consuming 100 million liters, probably neighbouring countries may be benefiting from this. Can’t we do something about it? It is a failure on us if we are not able to control it.”