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By Adewale Sanyaolu, Sunday Ani, Chukwudi Nweje and Merit Ibe
The Senate and the House of Representatives, yesterday, approved the request of President Muhammadu Buhari to earmark N4 trillion for premium motor spirit (PMS), popularly known as petrol after they considered reports from their committees on finance.
The approval was sequel to a request by President Buhari for revision of the 2021 fiscal framework.
However, the approval has drawn the ire and comdemnations of some Nigerians and group.
President Buhari had written the National Assembly in two separate letters, dated, April 5, requesting approval of N4 trillion for fuel subsidy in the proposed amendment to the 2022 Fiscal Framework.
In forwarding the request for the revision of the medium term expenditure framework, the president requested the lawmakers to approve an additional N3.557 trillion in addition to the N442.72 billion provided in the 2022 budget for subsidy.
The lawmakers also approved the reduction in crude oil production quota from 1.8 million barrel per day to 1.6 million barrel per day and a $73 oil price benchmark.
The two chambers also approved a cut in the provision for federally funded upstream projects being implemented by the Federal Government by about N200 billion from N352.80 billion
According to the letter, the president had 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 the Petroleum Motor Spirit (PMS) subsidy at a time when high crude oil prices have elevated the subsidy cost has significantly eroded government revenues. There is also the need to make adequate provisions for the recent enhancements of allowances for officers and men of the Nigeria Police to boost their morale as they grapple with heightened security challenges in the country.
“Following these developments, it has become necessary to adjust the fiscal framework and, accordingly, amend the 2022 Appropriation Act to ensure its successful implementation.
“The adjustments to the 2022 Fiscal Framework include an increase in the project oil price benchmark by $11 per barrel, from $62 per barrel to $73 per barrel. A reduction in the projected oil production volume by 283,000 barrels per day from 1.883 million barrels per day to 1.600 million barrels per day.
“An increase in the estimated provision for PMS subsidy for 2022 by N3.557 trillion from N442.72 billion to N4.00 trillion. A cut in the provision for federally-funded upstream projects is being implemented by N200 billion from N352.80 billion to N152.80 billion.
“An increase in the projection for the Federal Government independent revenue by N400 billion; and an additional provision of N182.45 billion to cater for the needs of the Nigeria Police.
“Based on the above adjustments, the Federation Account (main pool) revenue for the three tiers of government is projected to decline by N2.418 trillion, while the Federal Government‘s share from the account (net of transfer to the Federal Capital Territory and other statutory deductions) is projected to reduce by N1.173 trillion.
“However, the amount available to fund the Federal Government budget is projected to decline by N772.91 billion due to the increase in the projection for independent revenue (operating surplus remittance) by N400 billion.
“Aggregate expenditure is projected to increase by N192.52 billion, due to increasing in personnel cost by N161.40 billion and other service wide votes by N21.05 billion (for the Nigeria Police), additional domestic debt service provision of N76.13 billion, and net reductions in statutory transfers by N66.07 billion, as follows: Niger Delta Development Commission by N13.46 billion from N102.78 billion to N89.32 billion: North East Development Commission, by N6.30 billion from N48.08 billion to N41.78 billion; Universal Basic Education COMMISSION, by N23.16 billion from N112.29 billion to N89.13 billion; Basic Health Care Fund by N11.58 billion from N56.14 billion to N44.56 billion; and NASENI, by N11.58 billion from N56.14 billion to N44.56 billion.
“Total budget deficit is projected to increase by N965.42 billion to N7.35 trillion, representing 3.99 per cent of Gross domestic product. The incremental deficit will be financed by new borrowings from the domestic market.”
In his reaction, Executive Director, Civil Society Legislative Advocacy Centre and Chairman, Transition Monitoring Group, Auwal Musa Rafsanjani, accused the National Assembly and the executive of colluding to fund corruption, especially when the lawmakers have several times investigated corruption in the fuel subsidy regime and the presidency, describing fuel subsidy as a fraud.
He also noted that the manner the money for the subsidy was approved lent credence to allegations by Nigerians that the legislature might be colluding with the executive to fleece taxpayers and raise money for the 2023 general election.
President of Arewa Youths Consultative Forum, Yerima Shettima, said he was not surprised because the Buhari government has never said anything and stood by it.
“Remember that when they were coming to power, one of the things they used to woo Nigerians was the fight against corruption, fight against insecurity and improvement of the economy but out of everything they promised Nigerians, none has been fulfilled. Instead, the reverse has been the case. Things are even worse than they were when they took over. So, I won’t be surprised if they are saying they are paying such money for subsidy,” he said.
He said what the government action represents is hard days ahead even as he wondered where the government expects to get the money to repay all the loans it has been borrowing.
On his part, President of the Middle Belt Forum, Bitrus Pogu, said everything about the government is mysterious.
“Before they came in, Nigerians were buying a litre of fuel for N87 and we all knew what subsidy payment was at that time. They claimed they were going to reduce the fuel pump price, but instead, they jacked it up and because Nigerians had sympathy for them, people didn’t protest; Nigerians took the fuel price increment in good faith.
“Down the line, not only has the cost of pump price increased further, including the unavailability that we are now facing, they are bringing this humongous money to be settled and the National Assembly, for whatever reason, is accepting this kind of thing; it is an unfortunate development for Nigeria.
“This government came in and continued to devalue the naira. They met it at N189 to the dollar, but today, a dollar is nearly N600 in the open market. Rather than repair our refineries, they continued importing fuel and a lot of money has been sunk into the maintenance of the refineries that don’t produce fuel; this is unacceptable. The government is supposed to serve the people, not be their enemies. Where are these monies going?’
Also, National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, warned that the country would be in serious financial crisis in the months ahead because the subsidy figure will keep rising.
“When government initially set aside N2 trillion for subsidy, I warned then that the figure will gallop because crude oil prices have been on the upward swing and it has kept rising,’’ he said.
Osatuyi said over 80 per cent of government revenue was being filtered away through debt servicing for both domestic and external debt, subsidy payment and recurrent expenditure with little left for capital expenditure.
He disclosed the N4 trillion will further deplete our external reserves because the fund is sourced at Central Bank of Nigeria rate and not black market.
Chief Executive Officer, Centre for the Promotion of Private Enterprises (CPPE), Muda Yusuf, said: “With this development, our macro-economic outlook should be a cause for worry. The outcomes of these approvals include increased borrowing, higher debt service, surge in fiscal deficit, heightening inflationary pressure and a risk of further depreciation in the naira exchange rate.
But, Executive Secretary of Major Oil Marketers Association, Clement Isong, said he empathised with government and warned that there were consequences to every decision taken.
However, he noted that the Russian-Ukraine crisis which was unanticipated caused an upward review in the subsidy budget from N2 trillion to N4 trillion.
‘‘This is a tough decision for any government to make in the circumstances we have found ourselves.”
