Following the decision to prolong the payment of petroleum subsidy, the Nigerian National Petroleum Corporation (NNPC) has presented a bill to the Federal Executive Council (FEC) for N3 trillion as what is necessary for 2022.
On Wednesday, the FEC met at the Presidential Villa in Abuja, presided over by President Muhammadu Buhari, to examine a request for more cash to allow the government to fulfill incremental fuel subsidy payments in the 2022 budget.
Mrs. Zainab Ahmed, the Minister of Finance, Budget, and National Planning, revealed this during the post-FEC briefing, recalling that only N443 billion is currently available in the 2020 budget to cover subsidy from January to June.
According to her, the NNPC requested N3 trillion from the Ministry of Finance for 2022, based on the realities on the ground, including the current hardship suffered by Nigerians and the absence of mechanisms to facilitate subsidy reduction.
“We also brought to Council today [Wednesday] a proposal for extra budgetary provisions to enable us to satisfy incremental fuel subsidy requests in the 2022 Budget, you’ll recall that we set aside N443 billion in the 2022 Budget, as appropriated, for a subsidy from January to June”. Ahmed added.
“Taking into account present circumstances, such as growing population misery and rising inflation, as well as the fact that the steps needed to facilitate a smoother withdrawal from the gasoline subsidy have yet to be implemented, Council concluded that it is preferable not to quit the fuel subsidy.”
“The Nigerian National Petroleum Corporation (NNPC) has submitted a proposal to the government for a N3 trillion gasoline subsidy for 2022. This means that we’ll need to set aside an additional N2.557 trillion to cover the subsidy demand, which is now around N270 billion every month”.
“In 2021, the actual under-recovery charged to the Federation was N1.2 trillion, or an average of N100 billion; however, in 2022, due to the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because a NNPC assessment indicates that the country consumes 65.7 million liters per day, we’ll end up with incremental costs of N3 trillion.”
According to her, Council examined the proposal and instructed the ministry to contact the National Assembly for a budgetary framework and budget revision.
“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, we’ve also been asked to further discuss with NNPC on how to make provisions for this and also how to rationalize this expenditure.” The minister explained.