NIGERIA SPENDS N9.2TRN ON PETROL SUBSIDY IN 19 MONTHS, SURPASSING N8.15TRN SPENT IN 16 YEARS
A recent report by Agora Policy has revealed that Nigeria has spent a staggering N9.31 trillion on petrol subsidies in just 19 months, surpassing the N8.15 trillion spent on subsidies between 2006 and 2021. The report, which analyzed data from various sources including FAAC communiqués, NEITI reports, and NNPCL’s 2023 AFS, shows that Nigeria spent N5.10 trillion on petrol subsidies in 2023 and an additional N4.21 trillion in the first seven months of 2024.
This excessive spending on petrol subsidies has raised concerns among analysts, who attribute the increase to the devaluation of the naira following the liberalization of foreign exchange in 2023. The naira’s value has plummeted by over 60%, with the exchange rate soaring to N1,592.06 per dollar, compared to N740 on June 1, 2023.
Despite President Bola Tinubu’s announcement to end petrol subsidies in his inaugural speech on May 29, 2023, the amount spent on subsidies since then has exceeded previous figures. The analysis shows that Nigeria’s subsidy percentage of GDP rose to 2.2% in 2023, despite the supposed elimination of the subsidy mid-year.
The report also reveals that President Tinubu has approved the use of the 2023 final dividends owed to the federation to fund the petrol subsidy and suspended 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.
Analysts have expressed concerns about the sustainability of petrol imports due to the mounting subsidy bill, which NNPC attributes to “forex pressure.” The report highlights the need for urgent action to address the issue and ensure the stability of Nigeria’s economy.
