The Federal Government has made known its intention to cut subsidies on petroleum products by half next year after sharp falls in global crude prices led to a downward review of its 2015 budget. It also assumed further cuts to petrol subsidies in 2016 to N408.68 billion and N371.18 billion for 2017.
DAILY POST gathered in the course of last week that President Goodluck Jonathan has submitted the revised budget figures to lawmakers, proposing to spend 458.68 billion naira ($2.59 bn) on petrol subsidy in 2015, down from 971.14 billion naira presented for 2014.
Similarly, the Minister of Finance and Coordinating Minister of the Economy, Ngozi Okonjo-Iweala, in a recent interview with Reuters noted that the declines in the price of oil, which has lost almost 30 percent since July, would impact the economy, requiring the Nigerian government to cut non-essential spending and raise more revenues.
She had proposed lowering the assumed oil benchmark for the 2015 budget to $73 per barrel from the $78 proposed in September, after global crude prices collapsed.
It would be recalled that the Federal Government tried to end subsidy in 2012 in an effort to cut government spending and encourage badly needed investment in local refining, doubling the price of a litre of petrol overnight to about 150 naira ($0.93) from about 65 naira.
The budget proposals assumed an exchange rate of N162 to the US dollar for 2015, weaker than N160 naira assumed for 2014. It expects the naira to weaken further to N163.50 in 2016, climaxing to N165 in 2017.
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