Despite “No more fuel subsidy” claims, FG to spend N5.4trn on fuel subsidy in 2024
Despite claiming the “Fuel Subsidy is gone” claim made by President Bola Tinubu on May 29, 2024, a newly leaked document prepared by Wale Edun, the minister of finance and coordinating minister of the economy has revealed that N5.4 trillion is earmarked for oil subsidies in 2024.
This is just as the document also reveals that N3.6 trillion was spent in 2023, while just N2 trillion was spent in 2022. Clearly, it would seem that despite the reported removal of fuel susbidies the amount spent on the sink-hole has been growing in geometric proportions in spite of government’s “No more fuel subsidy” claims.
Federal Government is no longer paying fuel subsidy – Kyari
The shocking part of this revelation on the N5.4 trillion on oil subsidies for 2024 is that government officials including President Bola Tinubu continue to make a song of having removed fuel subsidy even to international audiences.
Wale Edun’s revelations were captured in a document on an Accelerated Stabilisation and Advancement Plan (ASAP), designed to address key challenges affecting the reform initiatives and stimulate development in various sectors of the economy. in the same document, he said approximately 63.0% of Nigerians (133 million) face multi-dimensional poverty and projected that 31 million people would be food insecure by August 2024.
On the fuel subsidy issue, Edun explained that, “At current rates, expenditure on fuel subsidy is projected to reach ₦5.4 trillion by the end of 2024. This compares unfavourably with ₦3.6 trillion in 2023 and ₦2.0 trillion in 2022,” a draft copy of the ASAP presented by Edun said.
The federal government had previously maintained that it would no longer subsidise fuel costs, instead opting for a deregulation policy.
Also, Heineken Lokpobiri, minister of state for petroleum resources (Oil) said in April, “As far as I’m concerned, the President removed the subsidy and it remains removed till today. Anybody who is saying that subsidy is being paid, it is left for the person to bring the facts and then we will talk about them” in defending government’s position that there is no more fuel subsidy.
However Gabriel Ogbechie, the founder and Group Managing Director of Rainoil Limited countered, in April that, Nigeria was spending N600 billion every month on petrol subsidies.
Ogbechie made this statement during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos.
He pointed out that with Nigeria’s daily fuel usage at 40 million litres and the foreign exchange rate at N1,300, the government’s subsidy per liter of fuel falls between N400 and N500, culminating in a monthly total of approximately N600 billion.
Meanwhile, Bloomberg reported in May that “Nigeria’s reintroduction of a gasoline subsidy months after it was scrapped is expected to guzzle almost half of its projected oil revenue this year, according to the International Monetary Fund.”
The implicit subsidy will cost Africa’s largest crude producer an estimated 8.43 trillion naira ($5.9 billion) of its projected 17.7 trillion naira of oil revenue, the IMF said in a report published on Thursday. Its forecasts are similar to Bank of America’s, which projects it could cost Nigeria between $7 billion and $10 billion this year if it imports between 18 and 25 billion liters of gasoline, Tatonga Rusike, BofA sub-Saharan Africa economist, wrote in a note.
It is curious why the Tinubu administration is professing a “No more fuel subsidy” mantra while making provision for a whooping N5.5 trillion payment for the same sub-head.
