₦airaland Forum

The administrations of former President Muhammadu Buhari in the final five months of his term in 2023 and President Bola Tinubu have collectively spent N9.31 trillion on petrol subsidies in 19 months.

Data from Agora Policy, supported by sources such as FAAC communiqués, NEITI reports, and NNPCL’s 2023 AFS, have revealed that Nigeria spent N5.10 trillion on petrol subsidies in 2023, with an additional N4.21 trillion allocated in the first seven months of 2024.

Further analysis from Agora Policy indicates that Nigeria’s total petrol subsidy expenditure reached N8.15 trillion between 2006 and 2021 and N20.37 trillion over 18 years and seven months. In 2022 alone, the government paid N2.911 trillion to subsidise petrol.

In his inaugural speech on May 29, 2023, President Bola Tinubu announced the end of the petrol subsidy. However, the amount spent on subsidies since then has exceeded previous figures. Analysts attributed this increase to the devaluation of the naira following the liberalisation of foreign exchange in 2023.

Since the naira‘s liberalisation, its value has plummeted by over 60%, with the exchange rate soaring to N1,592.06 per dollar this week, compared to N740 on June 1, 2023.

The analysis has shown that Nigeria‘s subsidy percentage of GDP rose to 2.2% in 2023 despite the supposed elimination of the subsidy mid-year. This percentage was only higher in 2011, a year seen as a tipping point.

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Agora Policy’s analysis of Nigeria’s subsidy as a percentage of GDP from 2006 to 2023 shows the following: 0.7% (2006), 0.7% (2007), 0.9% (2008), 0.5% (2009), 0.7% (2010), 3% (2011), 1% (2012), 0.6% (2013), 0.5% (2014), 0.3% (2015), 0.1% (2016), 0.1% (2017), 0.6% (2018), 0.4% (2019), 0.1% (2020), 0.7% (2021), 1.5% (2022), and 2.2% (2023).

A recent report revealed that President Bola Tinubu has approved the NNPCL’s request to use the 2023 final dividends owed to the federation to fund the petrol subsidy. The report also indicated that the president approved suspending the 2024 interim dividend payments to the federation to bolster NNPC’s cash flow.

According to an NNPCL forecast, the cumulative petrol subsidy bill from August 2023 will reach N6.884 trillion by December 2024. According to analysts, President Tinubu’s announcement of removing the fuel subsidy in May 2023 initially saved the government N400 billion by June. However, NNPC‘s Group CEO Mele Kyari noted that the savings were short-lived due to the naira’s devaluation, which led to a month-on-month increase in the NAFEX exchange rate.

In August 2023, NNPC’s fuel importation costs shifted from surplus to negative, incurring a subsidy bill of N52.73 billion. After fluctuating for months, the bill surged to N833.68 billion in April. In June 2024, NNPC raised concerns with President Tinubu, stating that the subsidy payments severely impacted its cash flow, jeopardising its status as a “going concern.”

NNPC also warned that it might be unable to sustain petrol imports due to the mounting subsidy bill, which it attributed to “forex pressure.” Although the bill dropped slightly to N537.66 billion in December, it reached a new high of N693.67 billion in January 2024.

misransome:
Buhari really destroyed things for us.

Paraman:
What do you expect? The government under Tinubu devalued the naira twice.

TemplarLandry:
Another joyful news {rumor} for HoeBee AKA Mr. Gbajue.

His bootlickers, come and rejoice too.

Paraman:
What do you expect? The government under Tinubu devalued the naira twice.

Racoon:
Same fuel subsidy issue both of them have shamelessly lied to this nation that they have done away with but yet have been amassing billion paying same despite the unavailability of petroleum products and lack of adequate stats on daily crude oil consumption in Nigeria. Tinubu and Buhari really dealt with Nigeria

FreeStuffsNG:
There's no more subsidy again. If there's subsidy today then NNPC would not have been able to make trillions in profits and pay dividends!

Brendaniel:
And people like you supported him to do it...

Back to the topic:

We warned them about Tinubu, we warned about the way and manner he removed subsidy, we warned about how he floated the naira...

We were called haters for speaking the truth...

nairalanda1:
There is a subsidy. NNPC is being forced to pay for it from those same dividends.

Plus if there was no subsidy, that profit would have been much much higher than that

nairalanda1:
On subsidy removal and floating the naira, there was nothing that could be done. (That is why some of us believe that subsidy should have gone since 2012, even since 1993)

Years , nay decades of trying to keep subsides and keep the naira strong at all costs had led to a situation where the national debt was eating 99% of our revenue. At the end, whoever was in charge was going to make some harsh decisions.

This is not about defending tinubu, as I don't support him or any of the candidates, and even believe that APC should have been kicked out last year, but at the point we were, keeping subsides or lkeeping a strong naira was not sustainable.

Again, we should have made these decisions over ten years ago.

FreeStuffsNG:
You need to go read what subsidy means

. Just in case you don't know, in present day Nigeria, you can bring in petrol at any price and sell at any price! Nobody will give you a dime if you sell below your cost price.

The closest to what NNPCL is doing is monopoly and not subsidy. It sells at a margin to Federal Government and monopolize that account. That's why it made billions of dollars in profit.

Brendaniel:
I doubt there is any global power that doesn't do subsidy...

nairalanda1:
And such subsides are either production subsides...which is what we don't do for our petroleum sector , or subsides for means tested poor people, not for everyone. And all are funded heavily by high tax uptake, and also because the gdp is far larger than Nigeria's gdp, even under the best of times (because many of these global powers earn most of their money from exporting manufactured goods and services, not from exporting oil and other raw materials like Nigeria and most African countries)...they can afford such things.

Again, at the end, fuel is sold at market price in most global powers. Government even heavily adds its own tax...which is far higher than what we can concieve here.

If we want to be like the global powers, we have to become a manufacutring nation, which we haven't become since independence. And which would require, roughly, several generations of hardship before we get there.

LagosPrince:
Don't vote for tinubu, he will scatter the country but some people no hear word. Now E don set .

Brendaniel:
No, not just production subsidies, but food, education, healthcare, electricity and so on, if you need details I will supply them for you...

TemplarLandry:
Another joyful news {rumor} for HoeBee AKA Mr. Gbajue.

His bootlickers, come and rejoice too.