Fuel Subsidy: Reps reject FG's N3.36trn proposal for 2023, set N1.7 trn as spending limit

The House of Representatives has passed the Medium Term Expenditure Framework and set a ceiling for spending on the controversial fuel subsidy.

The lawmakers put a spending cap of N1.7 trillion for the 2023 fiscal year against the N3.3 trillion proposed by the federal government.

In the MTEF passed on Thursday by the lower chamber, the lawmakers rejected the two scenarios presented by the executive in the proposed MTEF.

According to the Minister of Finance, Zainab Ahmed, in the first scenario, the deficit is projected to be N12.41 trillion in 2023, up from N7.35 trillion budgeted in 2022, representing 196 per cent of total revenue or 5.50 per cent of the estimated GDP.

In this option, she added, the government would spend N6.72 trillion on subsidy.

Mrs Ahmed said the second option involves keeping subsidy till June 2023 and that this scenario will take the deficit to N11.3 trillion, which is 5.01 per cent of the estimated GDP. In this option, PMS subsidy is projected to gulp N3.3 trillion.

In the MTEF report adopted by the Committee of Supply, the House resolved “that the cost of petroleum subsidy be capped at N1.7 trillion accordingly, all relevant agencies of the governments will be required to take necessary action to keep the petroleum subsidy cost to the government within the N1.7 trillion ceiling in 2023.”

The lawmakers stated that by this action, “the sum of N737,306, 443,151 will be saved and this should be used to reduce the fiscal deficit of N11.3 trillion of the government as contained in the MTEF/FSP,” and “the savings from the subsidy regime amounting to N737.31 billion to N10.56 trillion,”

Figures not adding up

However, the figures presented by the lawmakers did not add up.

Going by the spending limit of N1.7 trillion and the expected saving of N737.36 billion, this gives an aggregate of about N2.4 trillion, which is lower than the N3.3 trillion proposed by the government.

In addition, the lawmakers increased the oil price benchmark from $70 per barrel to $73 per barrel, hence, the extra $3 on every barrel. Despite this adjustment, the deficit was only reduced by N737.36 billion savings from the subsidy ceiling.

When clarification on these discrepancies was sought during a media briefing, the Vice Chairman of the Committee, Saidu Abdulahi (APC, Niger), promised to go over the documents.

Report

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments