The Federal Government has disclosed that the sum of N3 trillion is required to continue paying for fuel subsidy which was recently extended for 18 months.
This was disclosed by Nigeria’s Finance Minister, Zainab Ahmed, after the Federal Executive Council (FEC) meeting on Wednesday.
The FEC also approved a request for amendment of the 2022 appropriation batch to be transmitted to the National Assembly and also N52.8 billion for the completion of three roads across the country.
What the Minister is saying about the cost of fuel subsidy
On the much-debated removal of subsidy on Premium Motor Spirit (PMS), the minister said about N3 trillion would be required to continue paying for subsidy. She, however, stated that government was looking at ways of scaling down the amount.
Ahmed stated that the Petroleum Industry Act (PIA) had required that all petroleum products should be deregulated within six months of signing the PIB into law.
She said, “And the six months would have meant from August to February, but when we were doing the budget we stretched that to June.
“But having to step back and take into account the realities of today, what it means is we have to go back and amend the PIA. So, the Ministry of Petroleum Resources will be leading on that.
“They had indicated that they will be asking for amendment to extend it to 18 months from six months. And then it means we can now also amend the budget. So the two processes will go side by side.”
Ahmed also stated that the FEC agree with the view of the state governors, that there was a need to scale down on the (N3 trillion) size, adding that even as the government is not immediately removing the fuel subsidy, they have to make sure that what the nation is incurring is efficient and that it is real cost that has been consumed by the country.
“How do we fund it? So we’ll have to reduce it from that N3 trillion and that is one. Secondly, also we have been running reconciliations with NNPC to reduce the cost.
“But also we have several reconciliations with NNPC and NNPC itself owes in some cases, government.
“So, we want to be able to settle some of the subsidy costs through this reconciliation process.
“So, when we’re done with that, whatever is left that we’re not able to apply to what an NNPC is owing the Federation will not be increasing the deficit. And that means increased domestic borrowing,” she said.