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Buhari defends N305 billion petrol subsidy in his N8.83 trillion 2019 budget
PRESIDENT Muhammadu Buhari has presented a budget proposal of N8.83 trillion for 2019 to a joint session of the National Assembly on Wednesday. He again made a strong case in support of petroleum subsidy.
Delivering his speech amidst cheers and jeers by supporters and opponents, Buhari explained that the 2019 budget is divided into: N4.04 trillion recurrent expenditure, N2.031 trillion capital expenditure, N492.36 billion statutory transfer, and N120 billion sinking fund. The sum of N2.14 trillion was also allocated for debt servicing, according to Buhari.
The Budget was premised on a crude oil benchmark of $60 dollars per barrel, an expected crude oil production of 2.3 million barrels per day (including condensates), an exchange rate of N305 for one US dollar, estimated GDP growth of 3.01 per cent, and an expected inflation rate of 9.98 per cent.
Expected revenue generation is projected at N6.97 trillion, made up of oil revenue of N3.73 trillion, non-oil revenue of N1.39 trillion.
Speaking further, Buhari said: “We have allowed N305 billion, equivalent to $1 billion United States Dollars, for under-recovery by NNPC, on Premium Motor Spirit in 2019. We will continue working to bring it downward so that certain resources are freed up to meet the development needs of our people.”
“Under-recovery” is a technical term that the Buhari administration uses in place of subsidy.
Explaining why his government is now voting money for fuel subsidy after criticising it during the Goodluck Jonathan administration, Buhari said that “in a period of economic challenges, higher purchasing power is weak, we must reduce some of the burden on Nigerians.
“The problem with subsidies in the past was abuse and corruption. Today, the government, through the NNPC, is the sole importer of PMS, and therefore, the under-recovery is from the NNPC trading account. This means [that] the possibility of some marketers falsifying claims is removed,” he said.
During the Goodluck Jonathan administration, the APC thoroughly criticised him for subsidising petroleum products instead of fixing the country’s refineries and stopping the importation of refined products.
In January 2012 when Jonathan announced he was stopping subsidy, the APC in collaboration with other civil society groups, led a massive protest that shut down the country until Jonathan rescinded his decision.
Shortly after winning the 2015 election, Buhari, who is also the substantive Minister of Petroleum Resources, announced the deregulation of the downstream sector, which effectively means the removal of all forms of petroleum subsidy. This led to an increase of petrol pump price from N87 to N145.
At the time, Vice President Yemi Osinbajo said that the removal of fuel subsidy saves Nigeria N15 billion on a monthly basis, and Ibe Kachikwu, the Minister of State for Petroleum Resources, also said that all Nigeria’s refineries will be fully functional and the country will no longer be importing fuel by 2019, or he would resign.
Recent events have since revealed that the Federal Government kept subsidising petroleum products to the sum of billions of dollars, even when such expenditures were not captured in the budget.
Buhari did not, in his speech at the National Assembly on Wednesday, say anything about plans to fix the nation’s three refineries or the earlier proposal to set up modular refineries in some states of the federation. Whether these projects are contained in the budget details, will be known in the coming days as the document becomes more available to the public.