Why suspending fuel subsidy removal will lead to more borrowings – Presidency

    ,,,,, NNPC requests N3trn for 2022 subsidy

BY EMEKA EJERE

Those lamenting Nigeria’s mounting debt profile may have to worry further as country may have to continue to borrow due to the suspension of the removal of fuel subsidy,

The Special Adviser to the President on Media and Publicity, Femi Adesina, stated this during an interview on Channels Television’s breakfast programme, Sunrise Daily on Wednesday.

An initial announcement to remove fuel subsidy in June had been widely rejected by individuals and groups, who saw it government inflicting more suffering on Nigerians.

But on Monday, the Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed, announced the suspension, saying removing fuel subsidy at this time would be problematic..

Adesina said, “Head or tail, Nigeria will have to pay a price, It’s either we pay the price for the removal in consonance and in conjunction with the understanding of the people, but if that will not come, the other cost is that borrowings may continue, and things may be difficult fiscally with both the states and the Federal Government.

“You know how much could have been saved if the subsidy was removed and how it could have been diverted to other areas and spheres of national life. But if you do not go that way now – and I agree that it may not be auspicious to go that way, then we have to pay a price.”

Last year, the Senate approved some loan requests by the government. This included the approval of $6.1 billion, as well as the $16,230,077,718 and €1,020,000,000 loan requests in July and November respectively.
According to Adesina, oil prices have been fluctuating globally for years as a result of one reason or the other, particularly due to COVID since 2019.
He stated that the price witnessed a decline as low as $30 per barrel, but later rose above $80 per barrel

However, many believe the suspension of the fuel subsidy removal has to do with the 2023 elections.
“It is a valid thing [to do],” Adesina said of the government’s suspension of the removal, adding, “but is this done because of elections next year? No.”
“It is done because as the minister (of finance) stated, the timing is not auspicious, inflation is still high. In the past eight months, we saw inflation reducing but the last month, it went up again; further consultations need to happen with all the stakeholders.”

He also debunked claims that the present administration’s proposal to extend the removal of fuel subsidy by 18 months was intended to booby-trap the next president.

“That was not the intention, the intention was also stated – the timing is not right, it will exacerbate the hardship of the people and the President genuinely cares,” Adesina said.

Meanwhile, the Nigerian National Petroleum Company (NNPC) has requested the sum of three trillion naira (N3,000,000,000,000) as fuel subsidy for 2022, Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, has said.

Ahmed spoke to State House correspondents after the Federal Executive Council meeting presided over by President Muhammadu Buhari on Wednesday.

“In 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because NNPC’s assessment is that Nigeria is that the country is consuming 65.7 million litres per day, that we would end up with an incremental cost of N3 trillion in 2022,” the minister added.

According to Mrs Ahmed, by implication, the Federal Government will have to make an incremental provision of N2.557 trillion in order to meet subsidy requirements which currently averages about N270 billion per month.

The finance minister further disclosed that only N443 billion is presently available in the 2022 budget meant to accommodate subsidy from January to June.
She also stated that the current realities on the ground including lack of structures, for now, has necessitated the NNPC to make the request.

That request, she revealed, was considered by the council, which has directed the ministry to approach the National Assembly for an amendment to the fiscal framework as well as the budget.