Nigeria’s Subsidy Spending Reemerges Despite Presidential Claims
Despite President Bola Tinubu’s assurance that his administration would not allocate funds to petrol subsidies, documents have revealed that the Nigerian government disbursed a total of N169.4 billion for this purpose in August. This move is aimed at maintaining the petrol price at N620 per liter, irrespective of fluctuations in global crude oil prices.
Analysts have raised concerns about the current price stagnation, especially considering the deteriorating naira-to-dollar exchange rate and international crude prices surpassing $95 per barrel, which suggests a resurgence of the subsidy.
According to documents from the Federal Account Allocation Committee (FAAC), the Nigerian Liquefied Natural Gas (NLNG) paid $275 million as dividends to Nigeria through NNPC Limited in August 2023. NNPC Limited utilized $220 million (equivalent to N169.4 billion at the exchange rate of N770/$) from this amount to cover the petrol subsidy, while retaining $55 million.
UPDATE: Tinubu Makes Clarification On Fuel Subsidy Removal Comment
This revelation indicates that the subsidy has made a comeback, with NNPC now using NLNG dividends to finance it. This development comes after former President Muhammadu Buhari’s administration left behind the highest recorded expenditure on petrol subsidies in Nigeria’s history.
According to reports from the Nigeria Extractive Industries Transparency Initiative (NEITI), the cost of petrol subsidies from 2015 to 2020 amounted to a staggering N1.99 trillion. The resurgence of these subsidies raises questions about the sustainability of the current pricing model and its impact on the country’s fiscal stability.
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