The federal government yesterday approved the sum N3 trillion to sustain subsidy payment regime in 2022.
This came after it stayed action on the implementation of the Petroleum Industry Act (PIA) and retained payment of petrol subsidy for 18 months.
The new subsidy provision amounts to 17.5 per cent of the total of N17.126 trillion 2022 budget.
The N3 trillion approved by the government is 55 per cent and 43 per cent of the capital component and recurrent expenditure of the 2022 budget, respectively.
Speaking with journalists after the virtual federal executive council meeting held at the presidential villa in Abuja yesterday, the minister of finance, budget and national planning, Mrs. Zainab Ahmed, said the NNPC had submitted a N3 trillion budget for subsidy for 2022.
She disclosed that 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.
“We also presented to council today (yesterday) a request for consideration to make additional funding provisions to enable us to meet incremental fuel subsidy request in the 2022 budget. You will recall that in the 2022 budget, as appropriated we have made a provision of N443 billion for a subsidy for January to June.
“The Nigerian National Petroleum Company (NNPC) has presented to the ministry a request of 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; but in 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because an NNPC’s assessment is that the country is consuming 65.7 million litres per day, now we will 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 how to rationalise this expenditure,” she said.
The minister added that the ministry had been directed to engage the NNPC with the possibility of bringing down the subsidy estimate.
“We’re going to engage NNPC to further interrogate the request that they presented with a view of trying to see how we can scale it down so that the country is not incurring N3 trillion for a fuel subsidy.
“We agreed with the view of governors, that there is a need to scale down on the size. So even as 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 real cost that has been consumed by the country,” she said.
The minister further said the government would fund the N3 trillion subsidy payment through outstanding debts owed it by NNPC.
She added that the debts were being sorted out through on-going financial reconciliations with the company.
“We have several reconciliations with NNPC, which is owing, in some cases, the government. So we want to be able to settle some of the subsidy costs through this reconciliation process.
“When we are done with that, whatever is left that we are not able to apply to what NNPC is owing the federation will not be increasing the deficit. And that means increased domestic borrowing. But we haven’t finished with the issue of reconciliation,” she said.
