President Mohammadu Buhari Tuesday afternoon submitted next year’s budget to the National Assembly allocating a paltry N60 billion for fuel subsidy.
Although it is not yet clear when the 2016 budget will take off, the fact that there is such a miserly allocation for subsidy means that from any time next year the pump price of premium motor spirit (PMS) will be sold at market price.
Only three weeks ago the President had sent a supplementary budget to the Senate in which he asked for over N500billion, with the bulk of the money, more than N400 going on meeting subsidy payments.
Incidentally, former President Goodluck Jonathan also welcomed Nigerians with a New Year’s gift of a fuel hike on Sunday, 1 January 2012; which prompted a massive nationwide strike.
After almost two weeks of strikes an agreement was finally reached between organised labour and the government for PMS to be sold at N97 instead of the N141 it was jacked up to on January 1.
Buhari had previously treaded cautiously over the issue of fuel subsidy.
In July after receiving a briefing from the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) and other agencies in the oil sector, he said: “I have received a lot of literature on the need to remove subsidies, but much of it has no depth.
“When you touch the price of petroleum products, that has the effect of triggering price rises on transportation, food and rents. That is for those who earn salaries, but there are many who are jobless and will be affected by it.”
Buhari also said that the lack of security, sabotage, vandalism, corruption and mismanagement, not necessarily subsidies, are the most serious problems of Nigeria’s oil sector.
However, the president has been under intense pressure to backpedal on the issue of fuel subsidy especially in the wake of the dwindling resources available to government because of the slump in world crude oil prices.
In fact only on Monday, writing in the Financial Times, Nigeria’s former Minister of Finance, Mrs Ngozi Okonjo-Iweala once again made a case for the removal of fuel subsidy pointing out that the policy was not only a huge drain on the economy but “the cost of these subsidies far outweighs the benefits and burdens the middle classes.”