FG to spend N6.72 trillion on fuel subsidy in 2023
The Federal Government of Nigeria said it will spend N6.72 trillion for fuel subsidy payments in the year 2023 as it has recorded a N3.09 trillion deficit in its 2022 budget implementation between January and April.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this during the presentation of the 2023 – 2035 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF-FSP) on Thursday in Abuja.
According to her, the deficit underscored the fiscal challenges confronting the federal government.
The Minister also announced that the Nigerian National Petroleum Company Ltd., which had funded the fuel subsidy until last month, would henceforth leave that responsibility to the federation.
This she said would even create a greater strain on the fiscal position of the federal government, describing fuel subsidy as unsustainable.
Ahmed stated that the government had projected fiscal outcomes in the medium term under two scenarios based on the underlying budget assumptions.
Under the first scenario, the Minister said “The subsidy on PMS is estimated at N6.72 trillion for the full year 2023.
“It will remain and be fully provided for by the NNPC on behalf of the federation.”
The second, she said, is that “petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2021, in which case only N3.36 trillion will be provided for.
“Both scenarios have implications for net accretion to the Federation Account and projected deficit levels.
“There will be tighter enforcement of the performance management framework for Government Owned Enterprises (GOEs) that will significantly increase operating surplus/dividend remittances in 2023.”
The rise in the price of crude oil and the effect of the Russia and Ukraine war was believed to have driven the increase in Nigeria’s fuel subsidy payment which the government had planned to remove in January but suspended the decision till June 2023.
