The federal government has said that its intention to slash subsidies on petroleum products by half in 2015 after severe falls in global crude oil prices is the reason for the downward reversal of next year’s budget.

President Goodluck Jonathan presented the revised budget figures to lawmakers last week, planning to spend N458.68 billion on petrol subsidy in 2015, showing a downward shift from N971.14 billion presented for 2014.

It also anticipated further slash of petrol subsidies in 2016 to N408.68 billion and N371.18 billion for 2017.

The Minister of Finance, Ngozi Okonjo-Iweala, has suggested dropping the assumed benchmark oil price for the 2015 budget to $73 per barrel from the $78 proposed in September, after global crude prices fall.

Okonjo-Iweala told Reuters last week that the fall in the price of oil would impact the economy, necessitating the government to reduce non-essential spending and raise additional revenue.

It will be recalled that the federal government made efforts to remove subsidy on oil in 2012 in a bid to reduce government spending and boost seriously needed investment in local refining, more than doubling the price of a litre of petrol from N65 to about N150 .

The budget proposals anticipated an exchange rate of N162 to the U.S. dollar for 2015, compared to N160 for 2014.