Fuel Subsidy Removal Latest: Federal Government Removes Provision For Fuel Subsidy From 2012 Budget

After decades of debates, protests and controversies, the fuel subsidy – as we used to know it – is gone. The 2012 budget presented to the National Assembly Tuesday  by President Goodluck Jonathan does not make any provision for subsidy.

Unlike in the 2011 budget in which N240 billion was appropriated but over N1.2 trillion has been spent so far, there is zero provision in next year’s budget – and since no money can be spent without appropriation, subsidy is as good as dead.

Although this is likely to lead to strikes and public demonstrations, the National Economic Council (NEC), chaired by the vice-president and made up of the state governors and governor of the Central Bank of Nigeria (CBN), had said on Monday Nigeria was facing an economic catastrophe similar to that of Greece if the subsidy remained.

The highlights of the 2012 Appropriation Bill include:

• An aggregate expenditure of N4.749 trillion, which represents an increase of six per cent over the N4.484 trillion appropriated for 2011;
 

• Crude oil production of 2.48 million barrels per day (mbpd) up from 2.3mbpd for 2011;

oil price benchmark of $70 per barrel and an exchange rate of N155 to a dollar; 

• Projected GDP growth rate of 7.2 per cent and an inflation rate of 9.5 per cent. 

• The gross federally collectible revenue is projected at N9.406 trillion, of which the total revenue available for the Federal Government’s budget is N3.644 trillion, representing an increase of nine per cent over the estimate for 2011.

• The sum of N1.32 trillion has been earmarked as capital expenditure, accounting for about 28 per cent of total expenditure compared to 26 per cent in 2011.

• The capital allocation also represents a 15-per-cent increase over the amount approved in the 2011 budget but, according to Jonathan, the emphasis this time is on the completion of critical infrastructure projects.

• A provision of N2.472 trillion has been made for recurrent (non-debt) expenditure which is 72 per cent of the budget, a reduction from the 74.4 per cent position in the 2011 budget.

• It also includes N398 billion for Statutory Transfers and N560 billion for Debt Service underscoring the real need to address the rising domestic debt profile.