After countless denials, FG projects N5.4trn for fuel subsidy in 2024

The Federal government said fuel subsidy is projected to gulp about N5.4 trillion in 2024 as against the N3.6 trillion budgeted for the same intervention in 2023.

This is contained in a draft copy report of the Accelerated Stabilization and Advancement Plan (ASAP) presented to President Tinubu by the finance minister, Wale Edun, on Tuesday.

The report showed that the estimated expenditure on fuel subsidy for 2024 is N5.4 trillion, this is a sum of N1.8 trillion more than the amount spent in 2023.

The government had previously maintained that the contentious petrol subsidy is gone after President Tinubu announced on May 29, 2023, that the subsidy is gone.

However, a draft copy of the ASAP report showed a projection of N5.4 trillion in subsidy expenditure, despite the claim that subsidy is no more.

“At current rates, expenditure on fuel subsidy is projected to reach N5.4 trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022,” the report said.

In an earlier statement, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the fuel subsidy removal is an ongoing process that depends on a combination of factors.

Edun said the government is working to ensure a complete elimination of fuel subsidies in the country’s economy, adding that the policy direction of the government now focuses more on Compressed Natural Gas (CNG) to power energy in the country.

“Clearly, it is a combination of pivoting away from petroleum imports. Now, we are focusing more on CNG.

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“It is an ongoing conversation, it is an ongoing process of ensuring that fuel subsidy that fuel subsidy is eliminated from the Nigerian economy, that is what Mr. President intent is and that is what is being worked towards,” Edun said.

The removal of fuel subsidy has been a contentious issue for some months as crude oil prices increase and the exchange rate continues to depreciate, leading critics to suggest partial subsidy remains despite talk of a removal.

Several observers maintain that the federal government has restarted the subsidy on petrol since its removal on May 29, 2023.

For instance, the former governor of Kaduna State, Nasir El Rufai, said the federal government is spending more on petrol subsidies than before.

In addition, the Special Adviser to the President on Energy, Mrs. Olu Veŕheijen, said that the Federal Government reserves the right to pay fuel subsidy intermittently to cushion hardship in the country.

On its part, however, NNPC has insisted that no subsidy is paid to its account from the federal government.

Addressing the issue in August 2023, the GCEO of the oil firm, Mele Kyari, stated that the company is only recovering the cost of import, adding that the federal government hasn’t paid a subsidy since May.

“I told you there’s no subsidy whatsoever, we are recovering our full cost from the products that we import. We sell to the market; we understand why the marketers are unable to import. We hope they do this quickly, and these are some interventions the government is making. There is no subsidy.” Kyari said.