On fuel price modulation and 2027 budget

The Minister of Finance and Coordinating Minister for the Economy introduced a price modulation policy last week to control fuel price volatility. In this case, a flexible price ceiling is being imposed temporarily on the commodity in question. It is different from rigid price control or applying a permanent subsidy. Actually, the policy was overdue because attendant inflation from the uncontrolled price had caused a lot of damage to the living standards of the citizens. As a consolation and surrender, we say “better late than never”.

The government policy is seen to be geared towards reducing the pains of the urban poor with much attachment to urban public transportation, with less concern for the middle class. This class serves as the buffer between the rich and the poor and, in the process, prevents class chaos. They deserve consideration too. They are the highly mobile labour that keeps the economy in motion and production. All vehicles should be able to buy fuel at the price below, or at most N1,350, at any fuel station. In this connection, the government should be able to make all fuel stations sell at the flexible price. By the way, as at the time of going to the press and three days after the Minister’s speech, the NNPC fuel stations in my area have not reduced the price to N1,350.00.

How many top civil and public servants earn N500,000 per month? More than half of their salaries go to fuel even at the fixed rate of N1,350.00. The rising cost of living occasioned by static wages or salaries and inflation has pauperized the middle class, such that they suffer a greater setback in living conditions than the urban poor the government seems concerned about. Most people in the urban areas move around with Keke Marwa and okada, and these are expected to be looking for NNPC fuel stations to buy fuel. How many CNG buses or vehicles are plying State or township roads? The policy should not be discriminatory but generalised. After all, government is expected to care for all citizens.

Production at Dangote and other modular refineries can be subsidized through reduction in the price of crude oil sold to them, and these refineries should equally be compelled to key into the modulated price scheme. There is no assurance that the war causing this problem will end soon, implying that this policy will be extended beyond the 30 days. It is therefore important that the review of the policy before the extension should take cognisance of issues being raised everywhere and appropriate adjustments be effected.

On budget 2027, there are indications from emerging reports that the federal government is planning to move 2026 unfinished projects into the 2026 budget. The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, was reported to have given a hint to that during the launch of the October 2026 edition of the World Bank’s Nigeria Development update.  But we are aware that implementation of the 2026 budget, particularly with respect to capital expenditure, has not started. Actually, the National Assembly recently approved the extension of the implementation of capital projects in the 2025 budget to December 2026. If we are still implementing the 2025 budget, the 2026 budget remains outstanding. I think we should just collapse the 2026 budget into 2027 or adopt it for 2027 instead of wasting resources preparing a new budget that will not be implemented.

Already, the minister has acknowledged the weaknesses in the preparation and implementation processes of the country’s budget. He identified unrealistic revenue projections and repeated extensions of implementation periods. This indicates that a reform in the budgeting processes is imperative.

Our budgets do not take cognisance of the economic environment even at the conception level. The annual budget formulation foundation is often faulty. I sometimes wonder whether the economic environment and factors are considered in the preparation. Political considerations are often the foundation for the budgets that are supposed to be rooted in economics. There are various methods or types of budgets adopted by countries.

Budget methods include incremental budgeting, zero budgeting, programme budgeting, among others. Most countries in the world, including Nigeria, adopt the incremental budgeting method because of its simplicity and low level of technicality in its formulation. Unlike zero or program budgeting, which are tied to projects and require technical expertise, the incremental budget requires adjustment of the previous data on various revenue and expenditure items upward to take care of inflation rates. It is a budget method that allows for political manipulation.

In the past, I led a team on assignments to help some states look into their state development plan, including the budgeting system. We found in one of the states that the prepared budget defied all sense of logic, given the national economic environment and the position of the state in generating funds internally. When we queried the status of the budget, the budget officer brought out another, or original budget submitted to the governor, which was rejected. It was a more appropriate budget for the condition of the state. The sitting governor at the time considered the prepared budget too low and too close in value to the one being implemented at the time. To the governor, it depicted “failure in governance” or lack of progress. The governor ordered a review upward with substantial upward adjustments of the figures! That is the nature of incremental budgeting.

The present Federal Government is in the mode of that governor who sees a bogus budget as a sign of progress, and it will be difficult for the Minister to prepare a reasonable and implementable budget. He is not a politician and does not reason like one. The last three federal government budgets have been prepared to show off that the country was making progress financially, when we know we are constrained by low productivity, debt servicing and repayment, as well as corruption in reporting actual revenue.

Revenues have always been under-reported due to poor monitoring. It would be good if the minister could prepare two budgets, namely the reasonable/implementable budget and the political, show-off budget for public deceit. Proper monitoring of revenue, expenditures, and budget implementation using technology is needed. The Minister should reform the whole budgeting system with a view to giving timely and adequate information on budget performance. Our budgets should henceforth be realistic and implementable.