Fuel Subsidy Deadline: Nigeria Will Still Spend N3.36trn Before June 2023

NIGERIA will keep its petrol subsidy until mid-2023 and has set aside N3.36 trillion to spend on it, Finance Minister Zainab Ahmed said on Wednesday.

News Point Nigeria gathered that Africa’s biggest economy spent N2.91 trillion towards a petrol subsidy between January and September 2022, a cost the government has blamed for dwindling public finances.

President Muhammadu Buhari had on Tuesday,  signed the 2023 budget of N21.83 trillion into law after lawmakers increased the size by 6.4% and raised the oil price assumption.

“Petrol subsidy will remain up to mid-2023 based on the 18-month extension announced early 2022,” Ahmed said.

Buhari said in October that the country would stop the petrol subsidy in 2023, when he steps down after Nigerians vote for a new leader in February.

Successive governments in Nigeria have tried and failed to remove or cut the subsidy, a politically sensitive issue in the country of 200 million people.

Lack of proper use of resources is constraining Nigeria’s development goals, the World Bank has said, urging the country to remove subsidies on petrol, electricity and foreign exchange that mostly benefit wealthy households.

News Point Nigeria recalled that in March last year, Marco Hernandez, the Lead Economist for Nigeria, World Bank, in an interview with Arise TV said, removal or not of fuel subsidies is Nigeria’s choice, citing that what the World Bank can do is lay the facts on the ground, inform and make sure that there is a political consensus that is ultimately well communicated.

He said, “What we see are the opportunities lost as a result of keeping petrol subsidies in place, we know the fiscal burden which is large and has been increasing.

“As a result, there are critical development expenditures that could be education, health or social protection, on infrastructure, that could help to promote growth but not taking place because Nigeria is deciding to subsidize petrol.

“What we put on the table right now are those opportunity costs, how our strategy could be played out so that there could real allocation of expenditure that promotes inclusive and sustainable growth.”

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