A report by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has shown that the Federal Government under the leadership of President Bola Tinubu could pay up to N5.4 trillion as fuel subsidy in 2024.
This will be up by N1.8 trillion from the N3.6 trillion paid in 2023 and by N3.4 trillion from N2 trillion paid in 2022.
The report by Edun: “Accelerated Stabilization and Advancement Plan,” comes a year after President Tinubu pronounced fuel subsidy dead.
It said: “At current rates, expenditure on fuel subsidy is projected to reach N5.4 trillion by the end of 2024.
“This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022.”
The report said the government had not reduced “fuel subsidies to zero given the current inflationary and consequent social pressures”.
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It also recommended developing a framework for market-driven pricing of petroleum products and a full fuel subsidy sunset to facilitate growth in the oil sector.
The report gave an indication that the Federal Government may soon approach the National Assembly for a supplementary budget of N6.6 trillion to fund the implementation of the ASAP, designed to advance President Tinubu’s economy-related “8 Priorities”.
ASAP, among other things, recommended the unbundling and commercialisation of the Transmission Company of Nigeria.
It also recommended the procurement of seven million smart meters and 150,000 distribution transformers to enable growth of the power sector.
It recommended intervention in four critical sectors with an estimated spending of N6.6 trillion.
The sectors are Agriculture and food security, Energy (Power and Gas), Health and social welfare, and Business support.
According to the document: “Emergency intervention is expected to cost approximately ¦ 6.6 trillion; proposed spending that is currently not in the Full Year 2023 budget. The proposed spend represents 2.1% of Full Year Estimate, FYE 2024 Gross Domestic Product, GDP.
“The estimated additional spending outlined does not include any fiscal implications from the freeze on the price of PMS Year-to-Date, YTD 2024.
“Approximately 49.0% and 27.0% are targeted at the energy sector and for business support, respectively
“A supplementary budget for N6.6 trillion would need to be in place with the appropriate funding (backed by an approved borrowing plan)
“At an adjusted spend of 75.0% of the proposed emergency funding requirements; approximately ¦ 5.0 trillion would be required.”
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