One month after Nigerians ended their protests against a 120% rise in the price of petrol, Finance Minister Ngozi Okonjo-Iweala, announced at a news conference in Abuja on Thursday that the new 2012 budget includes costs of 888 billion naira for fuel subsidies, up from 155 billion in the previous plans.
The Afro-beat king Fela Anikulapo Kuti called it 'government magic'! You can thus see that the claimed figure for fuel subsidy will never go down even if the pump price goes as high as N200. Strange indeed!
Again, rather than achieving the fiscal prudence preached by the former World Bank MD, Mrs Iwealla revised the outlook for the 2012 budget and widended the deficit.
While government expects revenue of N3.460 trillion, the aggregate expenditure amounts to N4.649 trillion, a deficit of N1.186 trillion. The 2012 deficit would reach 2.97 percent of gross domestic product, up from 2.77 percent in its previous fiscal plans outlined in December.
Ngozi Iwealla will pay for the deficit by raiding the Excess Crude Accounts, ECA. Under the new budget, which President Jonathan is expected to forward to the National Assembly at a date not specified yet, government said the deficit of N1.186 trillion will be financed with N10 billion from privatisation proceeds; N75 billion from oil signature bonuses; and domestic borrowing requirement of N794.4 billion
The minister said this is due to the cost of partially reinstating petrol import subsidies. "after extensive consultations, the amount required for petrol subsidy was estimated at N656.3 billion, and there was a carryover of N231.8 billion for 2011. Thus the new 2012 budget includes costs of 888 billion naira for fuel subsidies, up from 155 billion in the previous plans", she said.
Nigeria's government removed fuel subsidies on January 1 but was forced to partially reinstate them after tens of thousands took to the streets in more than a week of protests over the increased cost of petrol.
Government plans to withdraw N225 billion from the Excess Crude Account, but under partial deregulation this amount would increase by the net amount of the extra subsidy outlay of N81.76 billion to N306.76 billion.
Africa's biggest oil producer saves money it earns from crude exports over a benchmark price into the ECA to help cushion its economy from potential oil price shocks.
The ECA contained more than $20 billion in 2007 but despite a period of record high oil prices since, the account has been drained, the money squandered, and only contained $3 billion at the end of last year.
The Finance Ministry said it would also fund the rest of the increased deficit from privatisation proceeds, oil signature bonuses and by cutting costs and squeezing out more revenues from government offices. Domestic borrowing remains at 794 billion naira, as in the last proposal.
Okonjo-Iweala said that by 2014, foreign debt is expected to hit $14.5 billion and domestic debt N10.065 trillion, thus bringing the total debt profile of the country to $79 billion.
In her first coming, Ngozi Iwealla raided the ECA of $12billion in payment of Nigeria's debt to international donors in 2006; Today, Nigeria's debt portfolio is back to its 2006 level - and in fact will grow more than its 2006 level by 2014!
It is all the more painful because despite this huge borrowing, Nigerians has not witnessed any improvement in their living standards, in fact, things have got worse!
The number of Nigerians living on less than $1 per day has increased since 2004 despite "economic growth" in Africa's top oil producer, the National Bureau of Statistics said last Monday. "It remains a paradox... that despite the fact that the Nigerian economy is growing, the proportion of Nigerians living in poverty is increasing every year," head of the bureau Yemi Kale said in a statement.
He said "51.6 percent of Nigerians were living below US$1 per day in 2004 but this increased to 61.2 percent in 2010."
The bureau's latest report makes clear that income inequality, a chronic problem in Africa's most populous nation, is worsening, according to Kale. Poverty rates declined between 1985 and 1992 and between 1996 and 2004 but that trend has reversed, Kale explained.
The bureau's report said poverty rates are most acute in the northwest, at 70.4 percent, and lowest in the southwest, at 50.1 percent.
In the words of Victoria Adekoya, 38, a nurse: "Nigeria is a major oil producer and the petrol subsidy is the only benefit we get for being Nigerians.
"We, the masses, do not have trust in our politicians any more. When they said they were removing the petrol subsidy, it did not feel like that to us. It just felt like they were doubling the fuel price. As soon as petrol went up, the price of beans doubled. Rice, yams and meat have all become more expensive.
"When the government announced we would pay 141 naira, we felt we would be subsidising more corruption by our politicians. Corruption is all they are good at. The 97 naira compromise just feels like we will be subsidising corruption slightly less.
"The strike ended because we needed to get back to work, to eat. It did not end because we were happy with the 97 naira price", she concuded.
Few Nigerians believe they benefit from the nation's considerable oil wealth, as petroleum revenue is funneled to the ruling and business elite thanks to corruption and poor management.
Yes, after the strike, in which several lives were lost, and which Nigeria lost billions of naira in lost earnings, Fuel still costs 97 Naira per litre, and we will still dash PDP cronies 888 billion naira in the fuel subsidy scam!
Didn't they say, the more things change, the more they remain the same!
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