FG needs N3trn to retain subsidy on fuel – Finance Minister

Minister of Finance, Budget and National Planning, Zainab Ahmed

The Federal Government will need N3 trillion to continue the payment of subsidy on Premium Motor Spirit (PMS) otherwise known as petrol.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, stated that government was looking at ways of scaling down the amount.

She said: “The Petroleum Industry Act (PIA) had required that all petroleum products should be deregulated within six months of signing the PIB into law. And the six months would have meant from August to February. But when we were doing the budget we stretched that to June.

“But having to step back and take into account the realities of today, what it means is we have to go back and amend the PIA. So, the Ministry of Petroleum Resources will be leading on that.

“They had indicated that they will be asking for amendment to extend it to 18 months from six months. And then it means we can now also amend the budget. So the two processes will go side by side.”

The minister revealed that the Federal Executive Council (FEC) agreed with the view of the State Governors, that there was need to scale down on the (N3 trillion) size.

“So even a government is not immediately removing the fuel subsidy, we have to make sure that what the nation is incurring is efficient, and that it is real cost that has been consumed by the country.

“How we fund it? So we’ll have to reduce it from that N3 trillion and that is one. Secondly, also we have been running reconciliations with NNPC to reduce the cost.

“But also we have several reconciliations with NNPC and NNPC itself owes in some cases, government.

“So, we want to be able to settle some of the subsidy costs through this reconciliation process.

“So, when we’re done with that, whatever is left that we’re not able to apply to what an NNPC is owing the Federation will not be increasing the deficit. And that means increased domestic borrowing.”

TheStar