The federal government of Nigeria through the Minister of Finance, Budget, and National Planning, Zainab Ahmed has reiterated that the government will stop fuel subsidy in 2023.
Speaking before the house committee on finance at the National Assembly, the minister said that the halt is expected to take effect by June/July after the end of the current administration.
Nigeria President, Muhammadu Buhari is expected to leave office on May 29, 2023.
The government is proposing to spend N19.76 trillion in 2023 while N3.36 trillion of the estimate would be used for oil subsidies. This will significantly affect the capital expenditure of the most populous African nation.
The debt repayment is already eating deep into the government revenue. Leaving it with very little to spend on both human and capital development.
Zainab Ahmed said that the amount being used to service debt had overshot appropriation in the 2022 budget.
She noted that 60 percent of revenue was to be spent on debt servicing, but the ratio went up to 90 per cent due to the pile of debts that are due for servicing.
She further disclosed that the government was under pressure to manage debt servicing due to the drop in revenue generation.
To meet its obligations to the citizens, the federal government will have to increase its revenue generation capacity and increase its tax net to capture viable businesses and rich individuals who are not paying taxes before.
It also has to cut excessive government spending and prevent oil theft that now happens on a large scale.
One of the largest oil exploration companies in Nigeria, Shell Petroleum Development Company (SPDC) raised an alarm in August over the unprecedented crude oil theft, pipeline vandalism, and illegal refineries in the Niger Delta. The Minister of State Petroleum, Timipre Sylva also discloses that Nigeria is losing 400,000 barrels of oil per day to crude theft.