The Nigerian government has yet again denied the payment of petrol subsidy. The Special Adviser to President Bola Tinubu on Information and Strateg
The Nigerian government has yet again denied the payment of petrol subsidy.
The Special Adviser to President Bola Tinubu on Information and Strategy, Bayo Onanuga, in a statement posted on his X handle on Tuesday said the government did not lie about the removal of fuel subsidies.
The government pays an average of N501.47 as subsidy on each litre of petrol in at least eight Nigerian cities.
The subsidy payment is replicated across the remaining states of the federation.
On Tuesday, Onanuga said the government has been faithful to its policy that it was no longer going to pay fuel subsidies since the deregulation of the sector in May last year.
“I have read a series of articles attacking the federal government for not telling the truth about fuel subsidy payments, following NNPC Limited’s admittance it was owing suppliers some $6 billion. The truth is that there is no discovery. No lie uncovered. The government has been faithful to its policy that it was no longer going to pay fuel subsidies since President Tinubu announced the deregulation of the PMS sector on 29 May 2023.
“Since then, subsidy provisions have disappeared from the budget. It was not in the Supplementary budget of 2023, not in the 2024 budget and the amended 2024 budget,” Onanuga said.
He, however, criticised the report suggesting a return of fuel subsidies.
“Rather what has unravelled was the commendable disposition of the oil company owned by all the tiers of government to absorb the rising costs of petrol at the pump and protect the Nigerian consumer. That generous disposition by NNPC Limited, backed by a compassionate president unwilling to let the people suffer, has been under threat for months, of the rising cost of crude and the devalued Naira,” he said.
The president’s spokesperson said the NNPC cried out recently because it can no longer sustain the price differential on its balance sheet without becoming insolvent. He added that the situation has greater implications for the ability of the three tiers of government to function as the NNPC has failed to pay into the Federation Account, the money that should go to the government.
“There are no easy choices. Something must be done to make NNPC survive, keep the engines of government running and petrol flowing at the pumps.”
According to him, the unfolding and the game changer and big relief giver may well be the Dangote refinery and other local refineries which will become the fuel suppliers to the local market.
“When Dangote Refinery and other refineries, including government-owned Port Harcourt Refinery, come fully on stream, our country and economy will benefit on all fronts. There will be many good paying jobs that will be created along the value chain. There will also be a drop in the huge demand for foreign exchange to import petroleum products,” he said.
In April, a former governor of Kaduna State, Nasir El-Rufai, said whether the government admits it or not, the landing cost of petrol shows that there is a form of subsidy being paid.
Similarly, the International Monetary Fund (IMF), in a report said that the Nigerian government reintroduced petrol subsidy at the end of last year.
The IMF said subsidy payment is expected to gulp almost half of Nigeria’s projected oil revenue this year. The implicit subsidy will cost Africa’s largest crude producer an estimated N8.43 trillion of its projected N17.7 trillion of oil revenue, the IMF said in the report.
In a draft copy report of the Accelerated Stabilisation and Advancement Plan (ASAP) presented to Tinubu by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, in June, the government said fuel subsidy is projected to reach N5.4 trillion by the end of 2024.
This, it said, compares unfavourably with N3.6 trillion in 2023.
Also, Tinubu approved a request by the NNPC Ltd to use the 2023 final dividends due to the federation to pay for petrol subsidy. NNPC had told Tinubu that it will be unable to remit taxes and royalties to the federation account for now because of the subsidy payments, which it termed “subsidy shortfall/FX differential.
According to the report, NNPC Ltd cried out to Tinubu in June that the subsidy payments were negatively impacting its cash flow and it was struggling to remain a going concern. The company said it might be unable to sustain petrol imports because of the ballooning subsidy bill, which it blamed on forex pressure.
In a recent review of NNPC Ltd’s financial statement, an Abuja-based policy think tank, Agora Policy said that it showed that petrol subsidy is not only back but bigger than the prior era. The think tank noted that the full figure for 2023 stood at N5.10 trillion, almost double the record set in 2022.
“With 4.2 trillion incurred in just seven months, 2024 is set for an all-time record,” the think tank said.
