Following the approval of a revised 2022 budget by the Nigerian Senate on Thursday, what was also amended was an upward review of the budget amount for Premium Motor Spirit (PMS) subsidy for 2022 by N442.72billion, from N3.557 trillion to N4 trillion.
This is according to details of the revised Appropriation Act passed by the Nigerian Senate on Thursday.
The increase in fuel subsidy comes at a time of increased crude oil prices and as the FG abandoned plans to remove subsidy in 2022.
What they are saying
Presenting the report, Senator Barau Jibrin, the Chairman of the Committee on Appropriation revealed that the budget was made up of N7 trillion recurrent expenditure, N5 trillion capital expenditure and N817 billion for statutory transfers. He also added that N3 trillion of the budget was for debt service.
“Also, the Senate approved the total sum of 3.55 trillion for PMS subsidy in 2022, forwarded in two separate requests by the President to the National Assembly for approval,” he said.
The Committee also disclosed that it recommended an oil price benchmark of US$73 per barrel be approved. Oil production volume of 1.600 million per day and Petroleum Motor Spirit (PMS) subsidy of N4.00 trillion were also approved.
What President Buhari said
- Earlier this month, President Muhammadu Buhari sent a request for adjustments in the 2022 fiscal framework to include amongst other things a reduction in the provision for federally funded upstream projects being implemented from N352.80 billion to N152.80 billion.
- Buhari in the letter said, “As you are aware, there have been new developments both in the global economy as well as in the domestic economy which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 Budget was based.
- “These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.
- “The decision to suspend the removal of Petroleum Motor Spirit (PMS) subsidy at a time when high crude oil prices have elevated the subsidy cost has significantly eroded government revenues.’’
What Nigerians are saying about fuel subsidy
- However, the talk of subsidy also comes with its own criticisms, as Nairametrics reported last month that former Senate President, Bukola Saraki challenged the Federal Government’s plans to spend on Petrol subsidy based on 70 million litres a day consumption. He stated that Nigeria’s fuel consumption cannot be more than 35 million litres a day, and hinted that Nigeria could be subsidizing fuel for neighbouring West African states.
- Socioeconomic research firm, SBM Intelligence in its report titled “Growing fuel prices and transport costs: Which way Nigeria” said the costs of fuel subsidy increased by 890% over a five year period (2017-2021) in Nigeria even though fuel prices have only increased by 12.1%.
- The report stated that between 2017 and 2018, the cost of fuel subsidy had increased by a whopping 405% yet fuel prices remained constant all through.