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HomeTop NewsNigeria may spend N6.7 trln on fuel subsidy in 2023, says Ahmed

Nigeria may spend N6.7 trln on fuel subsidy in 2023, says Ahmed

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Nigeria on Thursday plans to spend N6.7 trillion on petrol subsidy payments in 2023, according to the minister of finance and budget, this is N2.7 trillion more than proposed in this year’s budget.

Subsidy or under-recovery is the underpriced sales of premium motor spirit (PMS), better known as petrol.

The Minister of Finance and Budget, Zainab Ahmed disclosed this on Thursday at the presentation of the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper (MTEF&FSP) in Abuja.

Ahmed said subsidy payment projection is based on two prevailing scenarios — business-as-usual or reform.

“Scenario 1 – the Business-as-Usual scenario: This assumes that the subsidy on PMS, estimated at N6.72 trillion for the full year 2023, will remain and be fully provided for,” she said.

READ ALSO: NNPC Ltd mega stations adjust upward fuel pump prices by 6% to N174

“Scenario 2 – the Reform scenario: This assumes 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.”

She, however, said that both scenarios have implications for net accretion to the federation account and projected deficit levels.

In January, the federal government postponed the planned petrol subsidy removal for 18 months, citing “high inflation and economic hardship.”

The Minister of Information and culture, Lai Mohammed said many other countries had also introduced measures to help citizens cope with high oil energy prices due to the Russia-Ukraine war.

“When you consider the chaos, the social disharmony and… instability such an action (of abolishing subsidies) would facilitate, is it worth it? I don’t think so,” Mohammed had said. 

In the first five months, Nigeria spent N1.27 trillion on petrol subsidy — with a plan to spend N4 trillion this year.

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