Fuel subsidy to cost Nigeria N900bn in 2022 despite PIA

Fuel subsidy to cost Nigeria N900bn in 2022 despite PIA

Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), says the government is making provision for fuel subsidy as part of its expenditure in the 2022 budget.

This is coming after the Petroleum Industry Act (PIA) has been signed into law, with the government planning to deregulate the downstream sector.

Kyari disclosed this on Thursday at the MTEF/FSP hearing organised by the Senate Committee on Finance in Abuja. According to him, the government is projecting N900 billion for fuel subsidy for 2022.

Earlier in March 2020, the government had announced an end to the fuel subsidy regime and the immediate deregulation of the downstream sector of the petroleum industry amid a global oil price crash.

However, this decision was later suspended earlier this year to allow for consultation with stakeholders and organised labour.

Mr Kyari told the lawmakers that, “the government had begun a conversation with relevant stakeholders to exit the subsidy regime and the process may not be concluded anytime soon, hence the need to reintroduce subsidy in the 2022 budget.”

‘‘There is an ongoing process that is engaging members of the organised labour, civil society organisations and many other institutions of government and other critical stakeholders to arrive at a landing on how and when we can exit the subsidy regime to be very precise.

“The government is not sure that it can conclude the process of exiting the subsidy regime before the end of 2021 or early 2022, hence the provision of fuel subsidy in the 2022 Appropriation bill”.

According to Kyari, the NNPC pays between N100 and 120 billion monthly to keep the pump price of petrol at N162 per litre and that the agency is sustaining imports to avert scarcity.

He had blamed the agency’s non-remittance of revenue on smuggling, round-tripping and other sharp practices.

The Medium Term Expenditure Framework (MTEF) sets parameters with which the budget is prepared, including the borrowing plan of the government.

It proposes $57 per barrel as crude price for 2022, $61 per barrel for 2023 and $62 per barrel for 2024 predicated on a base national production of 1.883 million barrels per day in 2022, 2.234 million barrels per day in 2023 and 2.218 million barrels per day in 2024, Premium Times reported.

Author: Greg