Having predicated its 2022 budget figures at $62/barrel, Nigeria’s government appears worried as the global price of Brent crude oil hits $119/barrel and is moving up, since the invasion of Ukraine by Russia on February 24, 2022.
Rather than celebrate the windfall occasioned by higher prices, Nigeria’s policy makers are worried that the rise in crude oil prices would raise the amount currently spent on petrol subsidy by the Federal Government by about 100 per cent when benchmarked against the projected price in the budget.
In December 2021, the House of Representatives passed the 2022 budget of N17.126tn and increased the oil benchmark to $62 as against the $52 that was proposed by the executive.
The current crude oil price of $119/barrel has doubled the budget benchmark.
The National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, stated, “Of course, fuel subsidy could rise by 100 per cent when the current price of crude oil is benchmarked against the projection in the 2022 budget.
“This is because oil prices have been climbing higher almost on a daily basis since Russia invaded Ukraine and caused some level of instability in the global oil business.”
Ukadike said the gains which Nigeria would have made from the rising crude oil prices were being eroded by the increasing amount being spent on petrol subsidy.
Nigerians in their plurality, including oil marketers, have been urging the Nigerian government to fix Nigeria’s refineries in order to effectively halt petrol subsidy and channel subsidy spending to other sectors such as education, health, etc.
This appeal continues, however, to fall on deaf ears of policy making and execution. This is because, Nigeria is not under “Just Care.”
Last month, the President Muhammadu Buhari wrote to the Senate, seeking the approval of a supplementary budget of N2.56tn, to augment the provision for subsidy on petroleum products from June to December 2022.
A government plan to put an end to petrol subsidy in February 2022 had to be suspended, after labour unions threatened to shutdown the country if it was removed.