President Muhammadu Buhari has asked the House of Representatives to adjust the Medium Term Expenditure Framework (MTEF) to accommodate the projected N4 trillion for petroleum subsidy in 2022.
The president, in a letter read by the Speaker of the House of Representatives, Femi Gbajabiamila, on Thursday, is seeking an increment of $11 to the oil benchmark to accommodate subsidy consumption and other expenses.
According to Mr Buhari, N442.72 billion was earmarked for fuel subsidy in the 2022 budget (January-June), but because of the hike in the price of crude oil, Nigeria is paying more for PMS subsidy, therefore, the country will require an additional N3.557 trillion for subsidy.
The current MTEF contains $62 BPD. If this is approved, the benchmark will now be $73 per barrel.
However, the government is planning to reduce daily production by 283,000 barrels because of the activities of vandals. This means the daily production will be 1.6 million BPD instead of 1.83 million BPD.
Mr Buhari blamed the ongoing Russia-Ukraine war and the activities of the oil vandals for the proposed fiscal adjustments.
“Spikes in the market price of crude oil, aggravated by the Russia-Ukraine war. Significant lower oil volume due principally to production shutdown as a result of massive crude oil theft between production platforms and terminals” are the two main factors responsible for the adjustments.