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When Ministers for Budget and National Planning, Udoma Udo Udoma; Finance, Mrs Kemi Adeosun and State for Petroleum Resource, Ibe Kachikwu; Governor, Central Bank of Nigeria, Godwin Emefiele and Executive Chairman, Federal Inland Revenue Service, FIRS, Babatunde Fowler, appeared before a National Assembly committee to defend the Medium Term Expenditure Framework (MTEF), they disclosed that the federal government would move the price of Premium Motor Spirit (PMS) from N87 to N97 per litre in 2016, while removing the subsidy paid on the product.
The Ministers lamented that an excess of N1 trillion has been paid for subsidy alone in 2015, adding that the outlay on the product is no longer sustainable given Nigeria’s current economic realities.
The Ministers also warned Nigerians to prepare for tougher times ahead as government reduces overhead spending, plugs loopholes and diversifies the economy away from oil which accounts for more than 90 per cent of the nation’s revenue.
Minister for budget and National Planning, Udo Udoma said “In preparing the MTEF, we seek a dramatic shift from spending on recurrent to spending on capital aspect of the budget. It is going to be tighter for everybody. All non essential expenditure would be cut out. We will reduce the overheads by seven per cent. We are beginning a journey of change and change has to start with the clarity of purpose of where we are going.”
Minister of State for Petroleum Resources, Dr Ibe Kachikwu, told the National Assembly Committee on Finance that it is imperative for the subsidy on PMS to end next year and for the country to increase its daily oil production targets; while monitoring pipelines to nip cases of vandalism in the bud.
Minister of Finance Kemi Adeosun added that her ministry has put together a strategy to reduce personnel cost. “The era when an agency generates money and spends 99 per cent of it is over,” she said. “The country paid N1.8 trillion in 2015 as personnel cost but there is a strategy in place in the 2016 budget to reduce it by N100 billion. For instance, we are already working with banks so that we can go cashless, so that we could give debit cards to MDAs to procure items”.
The Buhari administration has been fiddling with whether to remove the subsidy on PMS or not since it assumed the reins. But with crude oil prices hitting a seven-year low with global reference crude, West Texas Intermediate and Brent trading at $34.7 and $36.7 per barrel respectively, effectively disrupting Nigeria’s $38 per barrel benchmark for the 2016 budget, that decision has been taken off the administration’s hands.