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Nigeria’s government will continue to subsidise gasoline prices until mid-2023 (Photo: NNPC Retail)

Nigeria expecting to spend nearly

$16bn on fuel subsidies in 2023

NIGERIA THE Nigerian government has budgeted a total require a subsidy spend of around NGN4 tril-
of NGN6.72 trillion ($16bn) for domestic gaso- lion ($9.6bn), while the International Monetary
line price subsidies in 2023 but hopes to spend Fund (IMF) expects a level of around NGN6
much less. trillion ($14.6bn).
The announcement was made this week by Minister of State for Budget and National
Minister of Finance, Budget and National Plan- Planning Prince Clem Agba cautioned that if
ning Zainab Shamsuna Ahmed during a public subsidies are not removed, the government may
consultation in Abuja. She said that the gov- struggle to execute capital projects in 2023.
ernment had set the subsidy level for gasoline, “It’s a decision that Nigerians will have to
known locally as premium motor spirit (PMS), take, because if you look at scenario one, it
because of issues related to the deficit and to means that we will not have any capital expend-
the fact that the state-owned oil firm, Nigerian iture in 2023. There’ll be no capital expenditure
National Petroleum Co. Ltd (NNPC), is transi- at all, and taking care of recurrent expenditure
tioning to a commercial business. will be a huge challenge with a scenario 2, where
Ahmed said: “The subsidy on PMS is esti- we’ll say let’s take it out to June. It means we
mated at NGN6.72 trillion for the full year only have about NGN 1 trillion left for capital
2023. It will remain and be fully provided for by expenditure,” he said.
[NNPC Ltd] on behalf of the federation.” “Unfortunately, all those who agree with our
She added that the subsidy would “remain in-house that we should remove the subsidy;
up to mid-2023 based on the 18-month exten- all the political parties, the governors in the
sion announced early 2021, in which case only country, the labour unions, NLC, TUC, party,
NGN3.36 trillion [$8bn] will be provided for.” you see, when they come up to the public, they
Ahmed explained that both of these scenar- will say don’t remove the subsidy but behind the
ios would “have implications for net accretion scenes, when they see the books, they under-
to the Federation Account and projected deficit stand that it has to be done,” he added.
levels.” Nigeria’s government was technically obli-
She added: “There will be tighter enforce- gated to stop subsidising domestic gasoline
ment of the performance management frame- prices within six months of the passage of the
work for government-owned enterprises Petroleum Industry Act (PIA).
(GOEs) that will significantly increase operating However, Abuja has opted to postpone
surplus/dividend remittances in 2023.” enforcement of that deadline, which fell in Feb-
Unless the subsidy is removed, she contin- ruary of this year, by 18 months in a bid to insu-
ued, future government spending plans would late consumers from the consequences of rising
require more. “That’s why it’s important for us to global oil prices. Since then, crude markets have
consider this issue of removal of subsidies very climbed to even greater heights, thereby run-
seriously,” she said. ning the bill for the continued subsidy payments
The government anticipates that gasoline will up even higher. ™

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