Nigeria to sustain fuel subsidy with N3 trillion in 18 months — Finance Minister

Subsidy
President Muhammadu Buhari presided over the Federal Executive Council (FEC) meeting on Wednesday, January 26, 2022. Photo: State House/Tolani Alli

The Nigerian government has set an 18-month plan for the sustenance of the fuel subsidy.

This was made known on Wednesday, as the Federal Executive Council (FEC) approved a sum of N3 trillion lifeline to cater for the payments of fuel subsidy for this year.

Briefing the newsmen after the FEC meeting at the Presidential Villa, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the Federal Government has proposed a N3 trillion budget to meet the incremental fuel subsidy request in the 2022 budget.

She said only N443 billion had been provided for in the budget passed, which was meant to accommodate subsidies from January to June.

According to her, the new request was considered by the Council, after which it directed the ministry to approach the National Assembly for an amendment to the fiscal framework as well as the budget.

“The Nigerian National Petroleum Company (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.” Ahmed said.

Earlier featuring on Channels Television’s Sunrise Daily programme, Presidential spokesman, Femi Adesina, had stated that Nigerians would have to pay a price if the subsidy is retained beyond June 2022.

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While he also dismissed claims by certain categories of Nigerians, especially the Peoples Democratic Party (PDP) that the decision by the Federal Government to retain fuel subsidy was based on the 2023 elections, Adesina said the decision had, rather, left the government with no other choice than to continue borrowing to fulfil its fiscal obligations.

“It is done because as the minister of finance stated, the timing is not auspicious, inflation is still high.

“In the past eight months, we saw inflation reducing but last month, it went up again; further consultations need to happen with all the stakeholders. The timing is not right, it will exacerbate the hardship of the people and the president genuinely cares.

“Politics is part of our lives, but elections will just be one event in the life of the country. When elections come, they go, the country continues. This fuel subsidy, whether it stays or goes, is going to have a serious impact on the economy,” Adesina said.

Speaking on the financial cost of the 18-month extension for subsidy removal, Adesina said: “Head or tail, Nigeria will have to pay a price; it is either we pay the price for the removal in consonance and in conjunction with the understanding of the people.

“The other cost is that borrowings may continue and things may be difficult fiscally for both the state and the federal government.”