The Nigerian Senate on Tuesday received a request from President Muhammadu Buhari to approve adjustments in the 2022 fiscal framework, including to raise the amount the federal government would expend on fuel subsidy this year to N4 trillion.
Precisely, the president sought the chamber to approve an increase in the estimated provision for PMS subsidy for 2022 by N3.557 trillion, from N442.72 billion to N4.00 trillion.
The increase in payment for the contentious subsidy on petrol in 2022 followed the decision of the government in January to extend the implementation of the Petroleum Industry Act (PIA) by 18 months after the labour unions and civil society organisations threatened showdown with the government.
The request for approval to adjust the 2022 fiscal framework, was contained in a letter dated April 5, 2022, read during plenary by the Senate President, Ahmad Lawan.
President Buhari, in the letter, explained that an adjustment to the 2022 became imperative in view of new developments in both the global and domestic economies.
According to him, the developments were occasioned by spikes in the market price of crude oil, which were a fallout of the Russian-Ukraine war.
“As you are aware, there have been new developments both in the global economy as well as in the domestic economy which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 Budget was based.
“These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.
“The decision to suspend the removal of Petroleum Motor Spirit (PMS) subsidy at a time when high crude oil prices have elevated the subsidy cost has significantly eroded government revenues,” a statement quoted the president to have said.
He, therefore, requested the upper chamber to approve an increase in the oil benchmark by $11 per barrel, from $62 per barrel to $73 per barrel.
The president also sought a reduction in the projected oil production volume by 283,000 barrels per day, from 1.883 million barrels per day to 1.600 million barrels per day.
President Buhari, underscored the need to cut the provision for federally funded upstream projects being implemented by N200 billion, from N352.80 billion to N152.80 billion.
He also proposed an increase in the projection for the federal government’s independent revenue by N400 billion; and an additional provision of N182.45 billion to cater for the needs of the Nigerian Police Force.
He added that, “based on the above adjustments, the Federation Account (Main Pool) revenue for the three tiers of government is projected to decline by N2.418 trillion, while FGN’s share from the Account (net of transfer to the Federal Capital Territory and other statutory deductions) is projected to reduce by N1.173 trillion.”
He disclosed that the amount available to fund the FGN budget was projected to decline by N772.91 billion due to the increase in the projection for Independent Revenue (Operating Surplus Remittance) by N400 billion.
The president further explained that aggregate expenditure was projected to increase by N192.52 billion, due to increase in personnel cost by N161.40 billion and other service wide votes by N21.05 billion (both for the Nigeria Police Force), additional domestic debt service provision of N76.13 billion, and net reductions in Statutory Transfers by N66.07 billion.
Giving a breakdown, he said the net deductions would see a cut by N13.46 billion from N102.78 billion to N89.32 billion for the Niger Delta Development Commission (NDDC); NEDC, by N6.30 billion from N48.08 billion to N41.78 billion; UBEC, by N23.16 billion from N112.29 billion to N89.13 billion; Basic Health Care Fund, by N11.58 billion from N56.14 billion to N44.56 billion; and NASENI, by N11.58 billion from N56.14 billion to N44.56 billion.
The president noted that the total budget deficit was projected to increase by N965.42 billion to N7.35 trillion, representing 3.99 per cent of Gross Domestic Product (GDP).
According to him, the incremental deficit would be financed by new borrowings from the domestic market.
Deji Elumoye and Sunday Aborisade in Abuja