2012 Fuel Subsidy Payments Already Out of Control, May Go over-Budget by N 1 trillion

Findings reveal that the Federal Government is on track to waste colossal sums on the fuel subsidy program this year. Going by indicators, the Federal Government may spend even more than it did last year on fuel subsidy payments.

In the 2012 budget, N 880 billion has been earmarked for subsidy, however the Federal Government spent N 304 billion on fuel subsidy in two months only. This means N 152 billion is being spent monthly on subsidy, and this translates to about N 1.8 trillion to be potentially spent on subsidy this year.

Sanusi Lamido, CBN Governor, speaking recently in New York on the 2012 budget and Nigeria’s over-reliance on crude oil receipts said any drastic fall in crude oil prices would bring Nigeria to its knees.

According to him, “Our major concern is that a major decline in the price of oil or (domestic) output would lead to a massive depreciation of the currency, a collapse in reserves and a huge growth in deficits and some of the states outside of the oil-producing region might actually find themselves in a situation where they are not able to pay salaries.

“I am trained to think in terms of ‘what if’ and that’s the mindset I bring to my job. What happens if oil prices go to $50 a barrel? It’s happened before.”

He advocated that government should not spend more than the N880 billion earmarked for the program in 2012.

He said, “I would simply like to see that the government does not pay a penny more than that, no matter what happens.”