The National Assembly last week, reviewed and amended Nigeria’s 2022 N17.126 trillion budget to reflect a N4 trillion subsidy cost for petrol, among other modifications. The N4 trillion represents nearly 25% of the country’s 2022 National Budget. The Senate and House of Representatives considered and approved the request of President Muhammadu Buhari to revise the 2022 Fiscal Framework, and subsequently passed the amendment to the 2022 National Budget. The N4 trillion represents a new figure for petrol subsidy, taking the sum up from N442.72 billion initially budgeted to cover petrol subsidy for the first half of the year.
In the light of the government’s claim that the initial subsidy sum was to cover only the first half of the 2022 fiscal year, it is unclear how it arrived at the sum of 4 trillion as the total subsidy cost for petrol for 2022. It will be recalled that the Federal Government stated that it would stop the payment of petroleum subsidy by the end of the first half of 2022. However, following threats of nationwide strike, the government suspended the planned subsidy removal. What is rather baffling is the astronomical increase of petrol subsidy to the sum of N4 trillion for the year, which the government has explained as being the result of the suspension of petrol subsidy removal in a period of high crude oil prices.
According to the Federal Government, global developments necessitated the revision of the 2022 Fiscal Framework. These developments include the increase in the market price of crude oil caused by the Russian-Ukraine invasion, and reduced oil production volume as a result of crude oil theft between production platforms and terminals.
The parameters that were modified in the revised Framework include an increase in the oil price benchmark from $62 to $73 per barrel and a decrease in oil production volume from 1.883 million to 1.6 million barrels per day. Consequently, projected Federal Government Independent Revenue was increased by N400 billion and the amount available to fund the Federal Government of Nigeria (FGN)’s budget is projected to decline by N772.91 billion.
The amendment to the budget also makes provision of an additional N182.45 billion for the Nigeria Police, to cater for the increase in the allowances of its personnel. It will be recalled that the Federal Government in December 2021, approved a 20% increase in the emoluments of officers and men of Police. This brings the aggregate expenditure on the 2022 national budget to N192.52 billion due to the increase in personnel cost (N161.40 billion) and service-wide votes (N21.05 billion) for the Police.
The Federation Account Main revenue (for the three tiers of government) is projected to reduce by N2.418 trillion, while the Federal Government’s share is projected to reduce by N1.173 trillion. Also, there was a reduction in the provision for federally funded upstream projects from N352.80 billion to N152.80 billion, and a provision of N76.13 billion for Domestic Debt Service.
Other budgetary allocations affected as a result of net reductions in Statutory Transfers by N66.07 billion include the following:
- Niger Delta Development Commission (NDDC) from N102.78 billion to N89.32 billion
- North East Development Commission (NEDC) from N48.08 billion to N41.78 billion
- Universal Basic Education Commission (UBEC) from N112.29 billion to N89.13 billion
- Basic Health care Fund from N56.14 billion to N44.56 billion
- National Agency for Science and Engineering Infrastructure (NASENI) from N56.14 billion to N44.56 billion
Nigeria’s 2022 budget is expected to result in a N7.32 trillion deficit. There is no indication how the government expects to pay for this deficit. Nigerians and experts however worry that the threat of unrestrained borrowing will again be the government’s next resort in this matter.