18th November, 2015
Nigeria’s President Muhammadu Buhari has requested the approval of a supplementary budget to cover mainly the 413 billion naira ($2.1 billion) of debt owed to fuel importers under a subsidy scheme, the presidency said on Wednesday.
Buhari asked the Senate to approve 465.64 billion naira to cover subsidies, funding for the military operation Lafiya Dole against the Islamist insurgency in the northeast, prisoner rations and pay for out-going and incoming legislative aides, a letter to the Senate said.
Pushing through the supplementary budget will be key to resolving fresh fuel shortages and closing the book on debts still owed to importers from 2014 and this year.
Subsidized imports account for roughly half of Nigeria’s gasoline needs and firms bringing in the product have not been paid since Buhari came to power at the end of May. They are increasingly struggling to finance their purchases with low dollar availability and shrinking credit lines.
Fuel shortages and panic-buying have returned to major cities, creating long queues outside retail stations. The west African nation relies on imports for the bulk of its domestic gasoline needs owing to a dilapidated refining system.
Under the previous administration, the supplementary budget to cover subsidies was not approved until May and was slashed by 90 percent against the previous year as government revenues had shrunk dramatically with the slump in global crude prices.
Buhari, who came to power at the end of May, does not want to phase out the costly and fraud-ridden subsidy scheme just yet at variance with the members of his party, the All Progressives Congress, and his minister of state for oil.
The government said two weeks ago that the remaining subsidy-related debt would be paid. Payments to importers have been chronically delayed and fuel shortages were a regular occurrence under former president Goodluck Jonathan. The current shortage is the first major one since Buhari took over.