Business

FG has been borrowing to fund petrol subsidy, says finance minister

Published

2 years ago

January 5, 2023

As FG ends petrol subsidy in June, allocates only N3.36bn

The Federal Government has been borrowing to fund petrol subsidies and this is totally unsustainable, Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has said.

She said only N3.36 trillion had been allocated for subsidy in this year’s budget in preparation of the government’s termination of the subsidy regime in June.

She disclosed this on Wednesday at the public presentation of details of the 2023 budget in Abuja.

“Fuel subsidy cost was a very high one; We have been funding it from borrowing,” the minister said.

She added that petrol subsidy would “remain up to mid-2023 based on the 18-month extension announced early 2022. In this regard, only N3.36 trillion has been provided for the PMS subsidy.”

The FG had announced plans to end subsidy from July 2022 but changed its position when faced with threats of nationwide protests by labour and pushed it to July 2023.

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The minister also said the reconciliation between the ministry and the Nigerian National Petroleum Company Limited, NNPCL, was ongoing to determine crude oil revenues and what should accrue to the federation account.

On the controversial securitisation of the N22.7 trillion borrowing from the Central Bank of Nigeria by Ways & Means, she said her team would engage the National Assembly on the lingering disagreement between the two arms of government.

Debt securitization is the process of packaging debt(s) from a source or number of sources into a single security to be sold to investors.

The minister said the decision to securitise the debt was to reduce the burden on the Federal Government, as interest on the Ways & Means could hit N2 trillion this year, from N1.2 trillion, if nothing was done.

“If successfully securitized, rather than the current interest rate of MPR+3per cent (19.5%), interest on the Ways & Means, it would reduce to about nine per cent,” she said.

On the macro-economy, she said the economy had been fully diversified, with oil revenue projected to contribute only N2.29 trillion (22 per cent of revenue) to the budget in the current fiscal year.

She said, “In aggregate, 22% of projected revenues is expected from oil-related sources, while 78% is to be earned from non-oil sources. This shows that we have achieved a fully diversified economy in this country.”

Non-oil taxes are estimated at N2.43 trillion; Federal Government independent revenues are projected to be N2.62 trillion; while other revenues total N762 billion.

FG awaits stamp duty fund probe

The minister disclosed that the Federal Government was awaiting the outcome of investigations into claims that the CBN had large stamp duty funds in its account.

Ahmed said that investigations had been instituted into the matter but did not give details.

She said, “There is an investigation that is being carried out by a committee. There are also some investigations that are being carried out by some security agencies.

“We are anxiously waiting for the outcomes of these investigations. If funds are realized from these investigations, it will help us fund the deficit in the 2023 budget.”

The presidency had dismissed the allegations of misappropriation of the stamp duty funds levelled against the apex bank.

Budget deficit put at N 11.34tn

This year’s deficit has been estimated at N11. 34 trillion, representing 5. 03 per cent of the Gross Domestic Product (GDP).

Ahmed said that the deficit would be financed mainly by domestic borrowing of N7 04 trillion; foreign sources of N1.76 trillion; N1. 77 billion from multilateral and bilateral loan drawdowns; and privatization proceeds of N206.18 billion.

She said the deficit level had exceeded the three per cent of the GDP provided in the Fiscal Responsibility Act and it might be necessary for the law to be amended to accommodate the new realities.

She said there was no plan to restructure the nation’s debt, adding that the administration had consistently met debt obligations.

Rather, she said that the country would continue to spread debt maturities through debt refinancing.

The fiscal deficit for 2022 was estimated at N8.17 trillion, inclusive of the Supplementary budget. As at November 30, 2022, the deficit was N6.37 trillion, which the minister said was totally financed by borrowings, mostly from domestic sources.

Related Topics:Featured fuel subsidy Zainab Ahmed

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Aviation

Disaster averted as bird strike hits Abuja-Lagos Air Peace flight

Published

11 hours ago

November 14, 2024

Trends Admin

Disaster averted as bird strike hits Abuja-Lagos Air Peace flight

An Abuja-Lagos flight was on Thursday aborted following a bird strike on the airplane belonging to Air Peace, forcing the authorities to ground the aircraft.

The bird strike experienced in the early hours reportedly prompted a ramp return to ensure the safety of passengers onboard.

All the passengers quickly disembarked and were calmed down before they were moved into another plane for the one-hour journey.

A bird strike is a collision between a bird and an aircraft, or other airborne animal, while the aircraft is in flight, taking off, or landing. And it can be a significant threat to aircraft safety.

Air Peace in a statement by its Head of Corporate Communications, Ejike Ndiulo, said the bird strike occurred at 6:30am, and all passengers disembarked normally.

The statement read, “We wish to inform our esteemed passengers that our Abuja- Lagos 06:30 flight experienced a bird strike before take-off, prompting a ramp return as a safety measure. All passengers disembarked normally.

“We have deployed a replacement aircraft for the affected flight in order to minimize disruptions, thus ensuring that passengers continue their journeys promptly.

“We appeal for the understanding of our valued passengers impacted by this development, as well as those on other flights that may experience delays.

“At Air Peace, we are committed to providing safe, comfortable, and reliable air travel for all our passengers.”

Business

NNPC achieves 1.8mbpd crude oil production

Published

11 hours ago

November 14, 2024

Trends Admin

NNPC achieves 1.8mbpd crude oil production

The Nigerian National Petroleum Company Limited (NNPC Ltd) and its partners have revved up crude oil and gas production to 1.8million barrels per day (mbpd) and 7.4standard cubic feet per day (scfd).

The company which announced this at a press briefing said the feat was achieved in compliance with the mandate of President Bola Ahmed Tinubu.

Speaking on the development, the Group Chief Executive Officer, Mr. Mele Kyari, congratulated the Production War Room Team that anchored the production recovery process.

“The team has done a great job in driving this project of not just production recovery but also escalating production to expected levels that are in the short and long terms acceptable to our shareholders based on the mandates that we
have from the President, the Honourable Minister, and the Board,” Kyari explained.

Giving details of the efforts of the Production War Room, the Chief War Room Coordinator and Senior Business Adviser to the Group Chief Executive Officer, Mr. Lawal Musa, disclosed that the feat was achieved through the collaborative efforts of Joint Venture and Production Sharing Contract partners, the Office of the National Security Adviser, as well as government and private security agencies.

NNPC achieves 1.8mbpd crude oil production

Business

FG gets fresh $134m loan from AfDB for agric projects

Published

12 hours ago

November 14, 2024

Trends Admin

FG gets fresh $134m loan from AfDB for agric projects

The Federal Government has secured a loan facility of $134million from the African Development Bank (AfDB) to help farmers boost seeds and grain production in the country.

This is contained in a statement issued by Anthonia Eremah, Chief Information Officer, Ministry of Agriculture and Food Security, on Thursday, in Abuja.

Minister of Agriculture and Food Security, Sen. Abubakar Kyari, made his know at the unveiling of the 2024/2025 National Dry Season Farming in Calabar, Cross River State capital.

Kyari explained that with the re-introduction of the national dry season farming to boost year-round agricultural production, the loan would be handy and guarantee national food security in the country.

The minister said the initiative is under the National Agricultural Growth Support Scheme-Agro Pocket (NAGS-AP) Project.

He said the federal government had declared an emergency on food production to enable all Nigerians to get easy access to quality and nutritional food at affordable rates.

Kyari also said government wants to use the agricultural sector for national economic revival through increase in production of some staple food crops such as wheat, rice, maize, sorghum, soybean, and cassava during both dry and wet season farming.

He added that 107,429 wheat farmers were supported under phase 1 of the 2023/2024 dry season, and 43,997 rice farmers under the second phase of the 2023/2024 dry season.