Petrol subsidy to end in June 2023 – FG

The House of Representatives Ad Hoc Committee to Investigate the Petroleum Products Subsidy Regime from 2013 to 2022, recently quizzed the Minister of Finance, Budget and National Planning, Zainab Ahmed, regarding overpayments of subsidy on Premium Motor Spirit (petrol) by the Federal Government.

In her presentation, Ahmed disclosed that the Federal Government had now proposed a new date to end payments on under-recovery between the landing cost and regulated pump price of PMS.

She stated that the subsidy regime was not sustainable and might force the government to borrow more in 2023.

According to the finance minister, the government had now planned for payment of subsidy for only half of next year, as contained in the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper.

Ahmed further disclosed that President Muhammadu Buhari transmitted the MTEF/FSP to the President of the Senate, Ahmad Lawan, and Speaker of the House of Representatives, Femi Gbajabiamila, as approved by the National Economic Council and the Federal Executive Council, respectively.

She stated, “One thing that stands out in the Medium Term Expenditure Framework was that if the nation holds on to fuel subsidy as it is designed now, we will be incurring from January to December, a subsidy cost of N6.4tn. But we suggested to the Federal Executive Council, and the council approved that, maybe, we could look at the option of exiting the subsidy (regime) for half a year. So, if we did that, then the cost would be N3.35tn, which is half of the N6.7tn.

“The Federal Executive Council approved the second option. That is the option that was conveyed by His Excellency, the President, to the National Assembly. But Let me also say that even though this is a reduced option, it would mean that we are borrowing more than we would have borrowed if we did not have fuel subsidies. In 2022 we are carrying the cost of subsidy throughout the whole year.”

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