President Muhammadu Buhari has formally requested the National Assembly’s approval of N4 trillion for fuel subsidy in the proposed amendment to the 2022 Fiscal Framework.
Buhari made the request in a letter sent to the Speaker of the House of Representatives, Hon. Femi Gbajabiamila.
The Speaker read the letter during plenary on Thursday.
The letter said: “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. There is also the need to make adequate provisions for the recent enhancements of allowances for officers and men of the Nigeria Police Force to boost their morale as they grapple with heightened security challenges in the country.
“Following these developments, it has become necessary to adjust the fiscal framework and accordingly amend the 2022 Appropriation Act to ensure its successful implementation.
“The adjustments to the 2022 Fiscal Framework include an increase in the project oil price benchmark by US$11 per barrel, from US$62 per barrel to US$73 per barrel. 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.
“An increase in the Estimated provision for PMS subsidy for 2022 by N3.557 trillion from N442.72 billion to N4.00 trillion. A cut in the provision for Federally-funded upstream projects is being implemented by N200 billion. from N352.80 billion to N152.80 billion.
“An increase in the projection for Federal Government independent revenue by N400 billion; and an additional provision of N182.45 billion to cater for the needs of the Nigeria Police Force.
“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.
“However, the amount available to fund the FGN Budget is projected to decline by N772.91 billion due to the increase in the projection for independent revenue (Operating Surplus Remittance) by
N400 billion.
“Aggregate expenditure is projected to increase by N192.52 billion, due to increasing 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, as follows: NDDC by N13.46 billion from N102.78 billion to N89.32 billion: 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.
“Total budget deficit is projected to increase by N965.42 billion to N7.35 trillion, representing 3.99% of GDP. The incremental deficit will be financed by new borrowings
from the domestic market.
“Given the urgency of the request for revision of the 2022 Fiscal Framework and 2022 Budget amendments, I seek the cooperation of the National Assembly for expeditious legislative action on this request.”
The President’s request was referred to the House Committee on Finance, chaired by Hon. Abiodun James Faleke, for further legislative action.