The Nigerian National Petroleum Company Limited (NNPC) on Wednesday presented a projected N3 trillion subsidy cost for 2022 financial year to the Federal Executive Council (FEC) for approval following the Federal Government’s decision to sustain fuel subsidy payment for the next 18 months.
At the FEC meeting presided over by President Muhammadu Buhari, the state-owned oil company’s request was considered in order to enable government to meet incremental fuel subsidy payment in the 2022 budget.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who made this disclosure during her post-FEC media chat with State House correspondents, recalled that only N443 billion was provided for in the 2022 budget for subsidy payment from January to June this year
The minister explained with the realities on ground, especially the socio-economic hardships facing ordinary Nigerians and the lack of structures to support subsidy removal, the NNPC made a request for N3 trillion from the Ministry of Finance for 2022.
She said: “We also presented to Council today [Wednesday] a request for Council’s consideration to make additional funding provisions to enable us to meet incremental fuel subsidy request in the 2022 Budget. You’ll recall that in the 2022 Budget, as appropriated, we have made a provision of N443 billion for a subsidy for January to June.
“Having taken into account the current realities; increased hardship in the population, heightened inflation, and also that the measures that needed to be taken to enable a smoother exit from the fuel subsidy are not yet in place, it was agreed by Council that it is desirable not to exit the fuel subsidy.
“The Nigerian National Petroleum Company (NNPC) has presented to the ministry a request for N3 trillion as fuel subsidy for 2022. What this means is that we have to make an incremental provision of N2.557 trillion to be able to meet the subsidy requirement, which is averaging about N270 billion per month.
“In 2021, the actual under- recovery that has been charged to the Federation was N1.2 trillion, which means an average of N100 billion, but in 2022, because of the increased crude oil price per barrel in the global market, now at $80 per barrel, and also because an NNPC’s assessment is that the country is consuming 65.7 million liters per day, now we’ll end up with incremental cost of N3 trillion in 2022”, Ahmed added
She confirmed that the company’s request was considered by Council, which directed the ministry to approach the National Assembly for amendments to the fiscal framework and the 2022 budget to accommodate it.
The minister further disclosed that the FEC also approved an amendment to be transmitted to the National Assembly to repeal clauses 10 and 11 concerning the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU) operations in the 2022 budget and also restore what the lawmakers had deleted, totalling N103 billion.
According to her, the amendment derived from President Buhari’s complaint about the tinkering done to the budget by the legislature, which may hamper the original plans of the Executive.
She explained: “The second memo we presented to Council today has to do with a request for approval of the 2022 Appropriation Amendment. If you recall, when the President signed the 2022 Appropriation into law on the 31st of December, he had raised some concerns that he had in some of the provisions in the budget and had indicated that he will be submitting an amendment proposal to the National Assembly for them to effect improvements in what has been done to the budget.
“So, today, Council took that amendment proposal and I just want to report that part of the requests that Council has approved today is for the National Assembly to repeal clauses 10 and 11. Clause 10 is referring to a provision that has been made that will enable the EFCC and NFIU be able to take 10% of whatever collections that they recover.
“We’re asking for that to be repealed because this is in direct contrast to the Acts of these two agencies and also it is in contravention of the Fiscal Responsibility Act and the Finance Act 2021.
“Clause 11, on the other hand, is a provision that has been made that says that the Nigeria embassies and missions are now authorised by this Appropriation Act to expend funds allocated to them under Capital Components without the need to seek approval of the Federal Ministry of Foreign Affairs.
“This again, in a view, and Council agreed, is inconsistent with financial regulations and also inconsistent with the provisions of the Public Procurement Act. So, we are asking for this to be repealed”, Ahmed stressed.
Expatiating further on some key adjustments made by the National Assembly in the 2022 budget, which FEC now would like to be reversed, the minister said: “Council also approved that some of the changes that were made in the Appropriation Act, totaling N103 billion, should be restored and examples of these are N22 billion that was provided for sinking fund to mature bonds that will be ready for payment in 2022 in the Nigerian domestic market, and also N12 billion for counterpart funding that is required for the various rail projects and N189 million to be adjusted also in the budgets of the Ministry of Transport, Secretary to the Government of the Federation and the Head of Service.
“These are projects that are provided in these ministries that are completely unrelated to their mandate. So, implementation will be a problem. Also, N5 billion to be restored for non-regular allowances of the Nigerian Navy, N15 billion to be restored for the regular allowances of the police formations and police commands and several others that Council looked at in detail.
“So, there’s a detailed schedule of this N103 billion that Mr. President will be formally conveying to the National Assembly to restore the adjustments that were made”, the minister added.
