Buhari Seeks N2.557trn for Petrol Subsidy
President Muhammadu Buhari has forwarded a proposal for the amendment of the 2022 spending plan, the appropriation act to the National Assembly in a move to include N2.557 trillion for petroleum subsidy payment.
Recall that Buhari signed a N17.13 trillion budget into law in December, with provision for subsidy payments up to June, when they were due to be ended as a part of the requirement for the implementation of the Petroleum Industry Act.
Due to macroeconomic conditions bedevilled by high unemployment, weak naira and steep headline inflation, stakeholders had called for a postponement of the removal of subsidy payment which they think would add pressure on Nigeria.
Consequently, in January, the Nigerian government reversed its pledge to end the subsidies then and extended them by 18-months to avert possible protests scheduled by the Labour Union and other stakeholders.
In a letter to the Senate and House of Representatives, Buhari said, “It has become necessary to present this amendment proposal considering the impacts of the recent suspension of the subsidy removal”
The president said the supplementary budget had become necessary, as there was a need to restore provisions for key projects, which was slashed by the National Assembly. Read: Subsidy Removal to Hike Petrol Price without Alternative Energy
Senate President, Ahmad Lawan, who disclosed this during plenary, yesterday, said the request was contained in a letter dated February 10, 2022. Buhari in the letter said it was imperative to remove all capital projects that were replicated in the 2022 Appropriation Act, Lawan said.
He said 139 out of the 254 projects in the budget totalling N13.24 billion had been identified by the president for deletion.
He said the president requested the National Assembly to amend the Appropriation Act to provide for capital expenditures in the sum of N106,161,499,052 billion; and N43,870,592,044 billion for recurrent expenditures.
In a letter read by Speaker Femi Gbajabiamila, at yesterday’s plenary, the president stated that “it has become necessary to present this amendment proposal considering the impacts of the recent suspension of the Petroleum Motor Spirit (PMS) subsidy removal and the adverse implications that some changes made by the National Assembly in the 2022 Appropriation Act could have for the successful implementation of the budget.”
Buhari underscored the need to reinstate four capital projects totalling N1.4 billion in the Executive proposal for the Federal Ministry of Water Resources; and N22.0 billion cut from the provision for the Sinking Fund to retire mature loans needed to meet government’s obligations under already Issued Bonds.
The letter read: “As I indicated at the signing of the 2022 Appropriation Act, I forward herewith the Proposals for the amendment of the 2022 Appropriation Act (as detailed in Schedules I-V), for the kind consideration and approval by the Senate.
“It is important to restore the provisions made for various key capital projects in the 2022 Executive Proposal that were cut by the National Assembly. This is to ensure that critical ongoing projects that are cardinal to this administration, and those nearing completion, do not suffer a setback due to reduced funding.
“It is equally important to reinstate the N25.81 billion cut from the provision for the Power Sector Reform Programme in order to meet the Federal Government’s commitment under the financing plan agreed with the World Bank. In addition, it is necessary to reinstate the four capital projects totalling N1.42 billion in the Executive Proposal for the Federal Ministry of Water Resources that were removed in the 2022 Appropriation Act.
“Furthermore, there is critical and urgent need to restore the N3 billion cut from the provision made for payment of mostly long outstanding local contractors’ debts and other liabilities as part of our strategy to reflate the economy and spur growth.
“You will agree with me that the inclusion of National Assembly’s expenditures in the Executive Budget negates the principles of separation of Powers and financial autonomy of the Legislature. It is therefore necessary to transfer the National Assembly’s expenditures totalling N16.59 billion in the Service Wide Vote to the National Assembly Statutory Transfer provision.
“It is also imperative to reinstate the N22 billion cut from the provision for Sinking Fund to Retire Mature Loans to ensure that government can meet its obligations under already issued bonds as and when they mature.
“The cuts made from provisions for the recurrent spending of Nigeria’s Foreign Missions, which are already constrained, are capable of causing serious embarrassment to the country as they mostly relate to office and residential rentals.
“Similarly, the reductions in provisions for allowances payable to personnel of the Nigerian Navy and Police Formations and Commands could create serious issues for the government. It is therefore imperative that these provisions be restored as proposed.
“It is also absolutely necessary to remove all capital projects is that replicated in the 2022 Appropriation Act; 139 out of the 254 such projects totalling N13.24 billion have been identified to be deleted from the budget.
“Some significant and non-mandated projects were introduced in the budgets of the Ministry of Transportation, Office of the Secretary to the Government of the Federation and Office of the Head of Civil Service of the Federation.
“There are several other projects that have been included by the National Assembly in the budgets of agencies that are outside their mandate areas. The Ministry of Finance, Budget and National Planning has been directed to work with your relevant committees to comprehensively identify and realign all such misplaced projects.
“The Appropriation Amendment request is for a total sum of N106,161,499,052 for Capital Expenditures and N43,870,592,044 for recurrent expenditures. I, therefore, request the National Assembly to make the above amendments without increasing the budget deficit. I urge you to roll back some of the N887.99 billion of projects earlier inserted in the budget by the National Assembly to accommodate these amendments.
“However, following the suspension of the PMS subsidy removal, the 2022 Budget Framework has been revised to fully provide for PMS subsidy. An additional provision of N2.557 trillion will be required to fund the petrol subsidy in 2022.
“Consequently, the Federation Account (Main Pool) revenue for the three tiers of government is projected to decline by N2.00 trillion, while FGN’s share from the Account is projected to reduce by N1.05 trillion. Therefore, the amount available to fund the FGN Budget is projected to decline by N969.09 billion.
“Aggregate expenditure is projected to increase by N45.85 billion, due to additional domestic debt service provision of N102.5 billion net of the reductions in Statutory Transfers by N56.67 billion, as follows: NDDC, by N12.61 billion from N102.78 billion to N90.18 billion; NEDC, by N5.90 billion from N48.08 billion to N42.18 billion; UBEC, by N19.08 billion from N112.29 billion to N93.21 billion; Basic Health Care Fund, byN 9.54 billion from N56.14 billion to N46.60 billion; and NASENI, by N9.54 billion from N56.14 billion to N46.60 billion.
“Total budget deficit is projected to increase by N1.01 trillion to N7.40 trillion, representing 4.01% of GDP. The incremental deficit will be financed by new borrowings from the domestic market.”
Nigeria’s budget deficit is set to rise by N1.01 trillion to N7.40 trillion or 4% of GDP as the government eyes new domestic borrowing to fund extended petrol subsidies, President Muhammadu Buhari said in a letter to parliament.
At the same time, the price of oil has soared. The West African country depends almost entirely on imports to meet its domestic gasoline needs. It is also facing shortages after taking delivery of some unusable substandard gasoline. #Buhari Seeks N2.557trn for Petrol Subsidy
