8th April, 2022
An estimated N4 trillion or $9.85 billion will go into petrol subsidy this year, President Muhammadu Buhari has said, according to his letter to the House of Representatives.
The letter urged the National Assembly to adjust the Medium Term Expenditure Framework (MTEF) to accommodate the projected figure.
The new figure is N1.5 trillion more than initially estimated for petroleum subsidy in 2022, according to Buhari’s letter in February to the Assembly.
In the 10 February letter, Buhari proposed N2.557 trillion for fuel subsidy, up from N440 Billion contained in the 2022 budget.
The president, in the latest letter read by the Speaker of the House of Representatives, Femi Gbajabiamila, on Thursday, seeks an increment of $11 to the oil benchmark to accommodate subsidy consumption and other expenses.
According to Mr Buhari, N442.72 billion was earmarked for fuel subsidy in the 2022 budget (January-June), but because of the hike in the price of crude oil, Nigeria is paying more for PMS subsidy, therefore, the country will require an additional N3.557 trillion for subsidy.
The current MTEF contains $62 BPD. If this is approved, the benchmark will now be $73 per barrel.
However, the government is planning to reduce daily production by 283,000 barrels because of the activities of vandals.
This means the daily production will be 1.6 million BPD instead of 1.83 million BPD.
Mr Buhari blamed the ongoing Russia-Ukraine war and the activities of the oil vandals for the proposed fiscal adjustments.
Buhari attributed the need for the adjustments to spikes in the market price of crude oil, aggravated by the Russia-Ukraine war.
He also blamed significant lower oil volume due principally to production shutdown as a result of massive crude oil theft between production platforms and terminals.
In January, the government suspended the removal of subsidy billed for June.
This came after the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) threatened to embark on mass protests.
After the suspension, minister of Finance, Zainab Ahmed, said the government will spend N3 trillion on subsidies in 2022.
It is now envisaged to gobble more money.