PRESIDENT Bola Ahmed Tinubu spent N3.6 trillion on petrol subsidy in 2023 and will increase the expenditure to N5.4 trillion in 2024 despite a series of denials and lies by Aso Rock officials, including his ministers.
The subsidy payments were exposed by a draft copy report of the Accelerated Stabilization and Advancement Plan (ASAP) presented to President Tinubu by Finance Minister, Mr Wale Edun, on Tuesday, in Abuja.
“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,” the draft copy said.
Denials, deceits by Tinubu’s ministers
In a bid to defend the administration in which they are key stakeholders, Mr Tinubu’s ministers have denied that fuel subsidy is still being paid.
Exactly three weeks ago, Minister of Budget and National Planning, Mr Atiku Bagudu, had told Premium Times that the Tinubu administration was no longer paying petrol subsidy.
“So, our policy on fuel subsidy stands. But we don’t control the daily movement of prices. But as a policy decision, we have decided that we wouldn’t be paying a subsidy,” he had said.
Just last week, Minister of State for Petroleum (Oil), Mr Heineken Lokpobiri, had also denied that the current administration was still paying petrol subsidy.
“And I can confirm to you that subsidy is gone. But there could be strategic interventions from time to time. But officially, subsidy is gone. If you look at the Petroleum Industry Act (PIA), the NNPC, as a national oil company, also has a legal obligation to also intervene from time to time,” he said while speaking on Channels Television to commemorate Mr Tinubu’s one year in office.
Edun does not deny petrol subsidy payment
However, during a Channels TV programme entitled “Sunday Politics” on June 3, Edun said petrol subsidy removal was an ongoing process that depended on a combination of factors.
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“The fuel price is determined by dynamics. The exchange rate plays a part. Domestic production of petroleum plays a part. To the extent that the fuel is imported, that means that the more supply of foreign exchange we have, of course, the lower the price.
“Clearly, it is a combination of pivoting away from petroleum imports. Now, we are focusing more on CNG. 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’s intent is and that is what is being worked towards.”
Like Buhari, Like Tinubu
Based on data obtained from the Nigerian National Petroleum Corporation Limited (NNPCL), the Ministry of Finance and other sources, Nigeria spent N10.529 trillion on petrol subsidies between 2012 and 2021, as reported by The Punch. This was under the governments of Mr Goodluck Jonathan and Mr Muhammdu Buhari.
The subsidy received N4 trillion in 2022, which was about 23.35 percent of Nigeria’s 2022 budget and 2-3 percent of Nigeria’s Gross Domestic Product.
Nigeria spent N3.36 trillion ($7.5 billion at that time) on petrol subsidy between January and June 2023, according to former Finance Minister, Ms Zainab Ahmed.
Mr Tinubu had declared that “subsidy is gone” on the day of his inauguration on May 29, 2023. He had also floated the foreign exchange market to allow the dynamics of demand and supply to determine exchange rates.
However, these pronouncements have tripled petroleum prices and led to the steep devaluation of the naira. Exchange rate on May 28, 2023 ( a day before Mr Tinubu took over) was N464.51/$, but naira had weakened to N1,475.95/$ on the NAFEM (official) market as at Tuesday, June 4, 2024.
A litre of petrol costs over N600 as against about N230/litre before Mr Tinubu came in as president.
Public outcry due to the consequences of the decisions have been widespread, with inflation hitting 33.69 percent in April 2024.
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“Tinubu could spent more than Buhari on subsidy in naira terms because of currency devaluation and inflation in the economy. Removal of any form of the petrol subsidy is a good policy, but I think the mitigating instruments were not properly implemented, which is why there are shocks everywhere,” said a Lagos-based economist, Mr Emeka Okolo.
