FG admits fuel subsidy is back after several denials, speaks on 2024 budget

In a startling turn of events, the federal government has finally acknowledged that Nigeria, the largest oil-producing nation in Africa, will spend up to N5.4 trillion on petrol subsidy in 2024.

This follows months of administration representatives adamantly denying such subsidies.

BusinessDay reported that the information was disclosed during a presentation by the Finance Minister and Coordinating Minister of the Economy, Wale Edun, on the Accelerated Stabilization and Advancement Plan (ASAP), which aims to address major obstacles to reform initiatives and promote growth in different economic sectors.

A draft copy of the ASAP presented by Edun said: “At current rates, expenditure on fuel subsidy is projected to reach N5.4 trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022.”

Prior to this, the federal government had insisted that it would stop subsidising fuel prices and instead pursue deregulation. Heineken Lokpobiri, minister of state for petroleum resources (Oil), said in April.

He said: “As far as I’m concerned, the President removed the subsidy, which remains unchanged until today. Anybody saying that subsidy is being paid, it is left for the person to bring the facts and then we will talk about them.”

Marketers say FG pays N600 billion monthly on subsidy

Legit.ng reported that Rainoil Limited MD Gabriel Ogbechie has claimed that the Nigerian government resumed the controversial petrol subsidy payment following the naira devaluation in the forex market.

The Rainoil boss disclosed this on Tuesday, April 16, 2024, during the Stanic IBTC Energy and Infrastructure Breakfast Session in Lagos.

Vanguard reported that Ogbechie pointed out that Nigerians consume about 40 million litres of petrol daily.

With the exchange rate of N1,300 and N1500 per dollar, the government subsidy per litre is between N400 and N500, leading to a monthly subsidy payment of N600 billion.

Why fuel subsidy removal was necessary

Legit.ng reported that President Bola Ahmed Tinubu said fuel subsidy removal saved Nigeria from going bankrupt.

Tinubu said the decision of his administration to discontinue fuel subsidy payments was in the interest of the people. He stated this while speaking at the Special World Economic Forum in Riyadh, Saudi Arabia, on Sunday, April 28.