Finance Minister Says N3.36 Trillion Set Aside To Fund Fuel Subsidy In 2023

Nigeria has no plans to remove petrol subsidy until mid-2023 and has set aside N3.36 trillion to fund it, Finance Minister Zainab Ahmed said Wednesday.

The minister briefed the media during a public presentation and breakdown of the 2023 Appropriation Act in Abuja, Reuters Reported.

Ahmed pointed out that while the total revenue for the 2023 budget is estimated at N10.49 trillion, only 22% is expected to come from oil-related sources, and the remaining 78% should come from non-oil sources.

According to the finance minister, the oil and gas sector only contributed 5.66% to Nigeria's economy in the third quarter of 2022. She emphasized that it is the non-oil sector that is driving the country's economic growth. The minister also highlighted how sectors such as ICT and agriculture, are doing better compared to the mining, oil, and gas industries, The Nation Reported.

The World Bank, earlier, advised Nigeria to end its costly petrol subsidy within the next three to six months and improve exchange-rate management in order to speed up other reforms and boost economic growth.

The petrol subsidy has cost Nigeria 864 billion nairas ($2.1 billion) in the first nine months of 2021, according to the World Bank. This is up from 107 billion nairas in 2020 and is the highest deduction in six years

"The Premium Motor Spirit (PMS) subsidy is eroding Nigeria's limited fiscal space to provide essential services," the bank added, as per the Guardian.

"Aggressive reform effort could contribute more to growth than a sustained period of high oil prices."

The World Bank published a report in November 2022 revealing that wealthy people disproportionately benefit from petroleum subsidies while poor Nigerians only receive 3% of the benefits.

"For years, a large share of Nigeria's resources have financed inefficient and regressive subsidies for petrol, electricity, and foreign exchange. Not all these subsidies are accounted for in the budget, which makes them difficult to track and scrutinize," the report reads, as per the Cable.

"However, available data suggest that these subsidies, which accounted for more than the amount spent on education, health, and social protection in 2021, benefit primarily wealthy households," it added.