Fuel subsidy to gulp N450bn in 2020

Zainab Ahmed, minister of finance, budget and national planning, says under-recovery, also known as subsidy, on petrol will be N450 billion in 2020.

She said this at the public presentation of the 2020 budget proposals in Abuja on Monday.

Ahmed said it was called “under-recovery” because it was the cost of operation of the Nigerian National Petroleum Corporation (NNPC).

“We have a provision for under-recovery of PMS in the sum of N450 billion. If you look at the budget office website, it is in the fiscal framework, which is an annexure to the budget,” she said.

President Muhammadu Buhari had on Tuesday, presented a budget proposal of N10.33 trillion to a joint session of the national assembly.

He put the federal government’s estimated revenue in 2020 at N8.155 trillion, comprising oil revenue of N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenue of N3.7 trillion.

Other estimates are N556.7 billion for statutory transfers, N2.45 trillion for debt servicing and provision of N296 billion as sinking fund.

The 2020 budget is based on an oil production estimate of 2.18 million barrels per day, oil price benchmark of 57 dollars per barrel and an exchange rate of N305 to a dollar.

Ahmed said that recurrent (non-debt) spending was expected to rise by 11.28 per cent, from N4.39 trillion in 2019 to N4.88 trillion in 2020.

This, she said, would reflect in salaries and pensions, including provisions for implementation of the new minimum wage.

Ahmed said the overall budget deficit of N2.17 trillion represents 1.52 per cent of the gross domestic product (GDP) and N1.64 trillion of it would be funded by both domestic and external borrowing.

According to her, the external sources will provide N850 billion, while domestic sources will provide N744.99 billion.

Citing the top 12 ministries, departments and agencies (MDAs) capital allocations, she said the ministry of works and housing was allocated N259.2 billion, power N127.67 billion, transportation N123.07 billion, education (including Universal Basic Education Commission) N162.74 billion.

Others are defence N99.87 billion, health N90.98 billion, agriculture and rural development, N79.79 billion and water resources, N78.34 billion.

Humanitarian affairs, disaster management and social development, N45.45 billion, aviation, N53.85 billion, industry, trade and investment, N41.34 billion and science and technology, N37.55 billion.

She, however, said that there were key expenditures captured in the medium term expenditure framework (MTEF), but were not in the 2020 budget.

“They are N61 billion for the Presidential Power Initiative, N1.22 trillion for federally funded projects in the oil and gas sector to be undertaken by NNPC on behalf of the federation,” she said.

“Others are: N272 billion as transfers to Tertiary Education Trust Fund (TETFUND) for infrastructure projects in tertiary institutions and N82.35 billion as transfer to Nigeria Sovereign Wealth Investment (NSIA) for Public Private Partnership/Presidential Infrastructure Development Fund (PIDF).”

For revenue, Ahmed said there were strategic revenue growth initiatives (SRGI) aimed at boosting revenue generation to meet targeted revenue to GDP ratio of 15 percent.

She added that the SRGI would be implemented with increased vigour to improve revenue collection and expenditure management.

She said Nigeria must mobilise significant resources to invest in human capital development and critical infrastructure.

“Some reforms will be tough but they must be done to look at the facts and be frank to ourselves,” she said.

“However, we will engage the public sector in whatever we do, including any changes in taxes, with regards to rates or administration methods.”