Fuel Subsidy Unsustainable, Rising Public Debt Worrisome – FAAC
The Federation Account Allocation Committee Post-Mortem Sub-Committee has said that the rising public debt is worrisome, while describing fuel subsidy as unsustainable.
This was according to a communiqué issued at the end of a three-day retreat to evaluate issues emanating from the Federation Account from January 2019 to September 2022.
A copy of the communiqué sent to our correspondent read, “The rising level of public debt and the increasing ratio of debt service to revenue is worrisome.”
It noted that the contribution of oil revenues to Federation account revenues had been challenged by structural constraints bedevilling the oil sector, including the unsustainable subsidy on petrol operating as the first line against gross oil revenues.
However, the communiqué stated that while removing fuel subsidy would improve government revenues, it would increase inflation, which would significantly impact low-income households by raising their cost of living.
It was further advised that “the downstream operations of the petroleum industry should be fully deregulated to provide for the removal of subsidy.
“Nigeria cannot continue to sustain the provision of subsidy on PMS because of the negative impact it has on the nation’s revenue. Accordingly, subsidy on PMS should be phased out.
“Revenue proceeds accruing from subsidy removal should be used for the benefit of the entire population and should be put to projects having direct impact on the citizens such as Education, Healthcare, Skill acquisition, etc.”
The committee further called for the reduction in the cost of governance, prudent management and transparency in all tiers of government.
Speaking at the retreat, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission, Mohammad Shehu, queried the non-remittances of revenue from some Government-Own Enterprises to the Federation Account.
He further said that there was a need to improve the revenue generation from the non–oil sector to the Federation Account.