Finance, Budget and National Planning Minister Zainab Ahmed said the federal government was spending 18.397 billion naira a day on fuel subsidies and putting the country in financial dire straits.
Nigeria must at some point make the painful decision to drop the fuel subsidy.
She revealed it on Thursday when answering questions from members of the House of Representatives ad hoc committee investigating the country’s petroleum product subsidy regime.
She said: “For 2023, the projection is that the average daily truck will be 64.96 million liters per day; this is approximately 65 million per day, using an average rate at the free market rate of 448.20 kN, then a regulator price at the pump of 165 N per litre. This gives us an average under-recovery i.e. the difference between N165 and N448 of N283.2k.
“So just multiply the amount of liter per day, the free market exchange rate of naira to the dollar, then the difference between the price at the pump and the free market price, the total amount of subsidy per day is 18.397 billion naira.
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“So if you project for the full year, January to December, it will be N6.715tn. If you project for six months, it will be 50% of that, 3.375 tn.
She said the ministry has consulted the leadership of the National Assembly and submitted the draft Medium Term Expenditure Framework (M-TEF) for 2023 to 2025, taken some inputs and visited the National Economic Council ( CEN) and at the Federal level. Executive Council (FEC).
Ahmed added that the FEC approved the M-TEF and the President forwarded the M-TEF to the National Assembly.
During the hearing, Federal Inland Revenue Service (FIRS) Executive Chairman Muhammad Nami explained that his role was purely revenue collection for the government and not keeping records of how the funds were spent.
However, the chairman of the ad hoc committee, Ibrahim Almustapha Aliyu, and the members questioned the rationale for the subsidy scheme as well as the payments and withdrawals of funds from the treasury and the surplus crude account to finance the subsidies.