Petrol subsidy no longer sustainable in Nigeria: Buhari

*President Muhammadu Buhari, in his 2023 Appropriation Bill presented to the National Assembly Friday, October 7, emphasises that the policy is not sustainable, considering current economic realities in the West African country

Isola Moses | ConsumerConnect

The Federal Government is advocating removal of the “controversial” fuel subsidy in 2023.

President Muhammadu Buhari, who disclosed this development when presenting his N20.51 trillion 2023 budget proposal to the National Assembly (NASS) Friday, October 7, 2022, in Abuja, FCT, stated that the policy is not sustainable, in view of the current economic realities in Nigeria.

The proposed N20.51 trillion for the 2023 budget represents a 15.37 percent increase on the 2022 budget.

Buhari said in his speech: “Petrol subsidy has been a recurring and controversial public policy issue in our country since the early eighties.

President Muhammadu Buhari, presenting the 2023 Budget proposal in the NASS, Abuja, FCT

“However, its current fiscal impact has clearly shown that the policy is unsustainable.”

The President also stated: “As a country, we must now confront this issue taking cognizance of the need to provide safety nets to cushion the attendant effects on some segments of society.”

According to him, the petrol subsidy policy is “unsustainable”, as he stressed that it would go come 2023.

Discontinuing the petrol subsidy regime is necessary for the country to manage limited resources, said he.

The President noted: “As we seek to grow our government revenues, we must also focus on the efficiency of utilisation of our limited resources.

“Critical steps we are taking include immediate implementation of additional measures towards reducing the cost of governance and the discontinuation of fuel subsidy in 2023 as announced earlier.”

Cushioning measures for consumers post-fuel subsidy era

As a practical measure to support millions of Nigerian consumers, however, Buhari stated that the government would make provisions to cushion the effects of subsidy removal on the populace.

He further said: “We are however, mindful of the fact that reducing government spending too drastically can be socially destabilising, and so will continue to implement programmes to support the more vulnerable segments of society.

‘Greatest threat to fiscal viability’

In reviewing recent economic developments, the President also warned of the dangers of revenue shortfalls in the next fiscal year.

Buhari said: “Mr. Senate President and Rt. Honourable Speaker, revenue shortfalls remain the greatest threat to Nigeria’s fiscal viability.”

In order to checkmate the said threat, the President explained that the Federal Government had accelerated efforts at ensuring that all taxable Nigerians declare income from all sources, and pay taxes due to the appropriate authorities.

“We are also monitoring the internally generated revenues of MDAs to ensure they are appropriately accounted for and remitted to the Consolidated Revenue Fund.

“The 50 percent cost-to-income ratio in the Finance Act 2020 has significantly improved operating surplus remittances by Government Owned Enterprises (GOEs),” he stated.

Buhari, therefore, urged the National Assembly to continue to cooperate with the Federal Government in enforcing the legal provision and other prudential guidelines imposed on the GOEs during the consideration of the budget proposals of the GOEs.

He, however, disclosed that current efforts at tackling such threat of revenue shortfalls are already working.

“I am happy to report that the revenue collection and expenditure management reforms we are implementing are yielding positive results, with recent significant improvements in non-oil revenue performance.

“However, while we continue to implement revenue administration reforms and improve our collection efficiency, we urgently need to find new ways of generating revenue,” he added.

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