According to the World Bank, Nigeria’s government spends more on gasoline subsidies than on social security, health care, and education. It therefore said that removing fuel subsidy would help the government towards its poverty reduction scheme.
The Washington-based lender said this in its latest Nigeria Development Update report, titled, ‘The Continuing Urgency of Business Unusual’. Nigeria is not benefiting from high oil prices due to lower oil output and fuel subsidy cost. “Removal of subsidy the authorities had originally planned by mid-2022 was postponed until 2023 expected to generate considerable fiscal costs.
The oil production output was 1.5 million barrels per day as of May2022, which is the lowest in 15 years. According to reports, the government’s projected cost of the gasoline subsidy in 2022 will be above $9 billion, or about 2% of GDP. The report added, “Due to the petrol subsidy and low oil production, Nigeria faces a potential fiscal time bomb.”
The Nigerian National Petroleum Corporation deducted a significant portion of the Federation’s oil revenues to pay for the petrol subsidy. The World Bank encouraged the government to redirect the money spent on subsidy towards targeted and time-bound cash.
According to the finance minister, the government has to cut down on some investments.
She said, “This PMS subsidy is costing us an additional N4tn than was originally planned. So, this is an unplanned deficit. We have gone to the National Assembly, and we have got approvals. The approval was simply to cut down on some of the investment costs.
She mentioned that the government has plans to assist diesel traders who carry the fuel across the nation. The government was careful so that this relief does not transform form of subsidy. She mentioned that NNPC generates no revenue yet requests additional funding to pay for fuel subsidies, Nigeria is not benefiting from oil profits.. “NNPC is not just delivering zero revenue. We are also as a federation has to give them more money.
The Governor of Anambra State, Prof Chukwuma Soludo, has also criticised the Federal Government for not removing fuel subsidy.
-Punch.
