According to experts, the N4 trillion vote for petrol subsidy in the revised 2022 budget voted by the National Assembly yesterday will have a detrimental impact on the economy.
The lawmakers agreed to President Muhammadu Buhari’s request for changes to the fiscal framework for the year 2022.
They adopted a revised budget for this fiscal year totaling over N17 trillion, with a provision of N4 trillion for petrol subsidies.
The budget for 2022 was increased from N17,126,873,917,692 to N17,319,704,091,019, up from N17,126,873,917,692.
The Medium Term Expenditure Framework was revised as requested by the President.
Dr. Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise, is concerned about the country’s macroeconomic prognosis in the near future.
“The result of these approvals is increased borrowing, higher debt payment, a jump in fiscal deficit, increased inflationary pressure, and the danger of additional naira devaluation,” he warned.
Infrastructure financing, he argued, could be harmed when recurring expenditure rises sharply.
He added: “The combination of debt service and petrol subsidy is likely to consume the entire revenue.
“We should brace for more challenging times. Major reforms necessary to return the economy to a recovery and growth path are unlikely to happen in the near term.
“This is coupled with the distractions that come with electioneering and transition periods.”
The National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, said the N4 trillion subsidy “is child’s play because we are still heading to a N6 trillion subsidy regime by year-end”.
He added: “If the international crude oil price continues to be at this price or goes higher, then we will have to pay more subsidy.
“Even now, the N4 trillion subsidy they are talking about is calculated at CBN’s official exchange rate of N417/dollar; it is not at N580/dollar. Look, part two of the subsidy increase will still come by August / September.
“It is sad that we are paying N4 trillion on subsidy, another N4 trillion on debt servicing and yet another N4 trillion on salary and expenses.
“Deregulation of petrol is the best, but if that is done, can Nigerians buy petrol at N500/litre?.
“At present, the country is at a crossroads on this subject.
“The Petroleum Industry Act (PIA) has been suspended for 18 months, so we cannot talk about PIA now.
“This means that the NNPC will continue to deduct subsidies at source because they are the sole importer of gasoline, and we must follow their laws.”
Clement Isong, Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), said the hike in subsidies was the government’s answer to Nigerians’ mood.
“People are having a hard time. The war between Russia and Ukraine has raised worldwide costs, and everyone is going through a very trying time.
“In its wisdom, the administration has opted to do what it thinks is best to get through these issues, and it is fully conscious of the cost of its decision.”
“It has passed through the National Assembly, so it’s a decision the country has made and we all have to live and abide by that decision.
