The Minister of Finance, Budget and National Planning, Zainab Ahmed, has revealed plans by the Nigerian government to end fuel subsidy by the end of June 2022.
She stated this while expressing regret on the increasing pressure on Nigeria’s revenue due to daily fuel subsidy payments.
Ahmed, who spoke at a panel discussion at the ongoing 27th National Economic Summit (NES) described the payments as a major hindrance to Nigeria’s economic goals.
She stated that actions are being taken to stop the payment, which is why there is no provision for payment of subsidies after the first six months of 2022.
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“In our 2022 budget, we only factored in subsidy for the first half of the year; the second half of the year, we are looking at complete deregulation of the sector, saving foreign exchange and potentially earning more from the oil and gas industry,” she said.
“We are very uncomfortable at the fact that we have borrowed at the quantum exceeding the threshold that is outlined by the Fiscal Responsibility Act, and must plug all holes to save what we have”
Speaking also at the event, World Bank Country Director for Nigeria, Shubham Chaudhuri expressed surprise that Nigeria was spending so much on fuel subsidy amid scarce revenue.
He called for some critical decisions to be made now for the country to realise its potential.
Chaudhuri said, “I think the urgency of doing something now is because the time is going in terms of retaining the hope of young Nigerians in the future and potential of Nigeria. The kinds of things that could be done right away – the petrol subsidy; yes, I hear that six months from now, perhaps with the PIA(Petroleum Industry Act) coming into effect, this will go away.
“But the fact is can Nigeria even afford to wait for those six months? And there is a choice: N3tn to PMS subsidy which is depriving states of much-needed revenues to invest in basic services.”
Recall that monthly payment made on subsidy, which is on course to hit N2.9 trillion by December is almost 44.27 per cent of the entire 6.28 trillion proposed budget deficit for next year.
It is also more than half of the N5.02 trillion the Nigerian government is looking at borrowing to fund next year’s budget deficit.
