Fuel subsidy gulps N13.69trn 16 years

… Dwarf entire budget for health, education, others

Nigeria in the last 16 years have spent around $74.39 billion or N13.69 on fuel subsidies, which is more than the entire budget for health, education, agriculture, and defence in the last five years.

According to the Nigeria Extractive Industries Transparency Initiative (NEITI) which provided the statistics, the sum also equals Nigeria’s capital expenditure for ten years, between 2011 and 2020.

“A breakdown of these figures showed that in 2005, the government paid $2.6 billion dollars (N351 billion) as a subsidy. In 2006 and 2007, it paid $1.99 billion and $2.18 billion (N257 billion and N272 billion) respectively.

READ ALSO: TUC disagrees with Tinubu over unilateral removal of fuel subsidy

NEITI added that subsidy payments more than doubled in 2008 and 2010 and witnessed the highest increase ever in 2011 to $13.52 billion (N2.11 trillion), citing a sharp decline was witnessed in the years 2012, 2013, 2014 and 2015 when it dropped to  $3.34 billion (N654 billion) in 2012.

They also noted a decline in subsidy expenditure continued in 2016 and 2017 to as low as $473 million dollars (N154 billion) in 2017.

“The reduction was short-lived as the payments skyrocketed to over $3.88 billion (N1.19 trillion) in 2018 and 2021 to $3.58 billion (N1.43 trillion). By these figures, Nigeria spent an average of N805.7 billion annually, N67.1 billion monthly or N2.2 billion daily,” she said.

Recall that President Bola Ahmed Tinubu on Monday, May 29, 2023, said the era of subsidy payment on fuel has ended. President Tinubu said the 2023 Budget made no provision for fuel subsidy, and subsidy payment is no longer justifiable.

After the statement on Monday evening, long queues returned as residents bought fuel for over N500/per litre against N195/per litre.

On Wednesday, the Nigerian National Petroleum Company Limited (NNPCL) jerked up pump prices of petrol (PMS) by over 200 per cent bringing the price of fuel to between N488 and N557 per litre.

READ ALSO: Fuel subsidy removal: Scarcity returns as marketers hike pump price

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A new pricing template purportedly sent to marketers by the NNPCL management to oil marketers late yesterday, directed that the new price adjustment come into effect from Wednesday May 31.

Commending President Bola Tinubu for taken the decisive action to block leakages, grow revenue and advance reforms in the oil, gas sector, Mrs. Obiageli Onuorah, Deputy Director/Head of Communications and Stakeholders Management of NEITI, said the subsidy regime has imposed a significant financial burden on the Nigerian economy.

She noted that the policy advisory released by NEITI in late 2022 to drive home the urgency to remove subsidy and resubmit earlier in 2023, NEITI recommended eight steps to manage subsidy removal.

READ ALSO: Fuel subsidy is gone, says President Bola Ahmed Tinubu

Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) said that the deregulation of the oil sector and subsidy removal is the only way to make Nigeria great.

The IPMAN National Public Relations Officer, Yakubu Suleiman, during an interview said, “Removing subsidy is the only answer to make Nigeria great because there is no country that can survive without deregulating the economy.”

Suleiman said Tinubu was only informing Nigerians that there is no more subsidy, noting that the administration of former President Muhammadu Buhari has announced subsidy removal by not making provision for it beyond June 2023 in the budget for this year.