The president has disclosed that the withdrawal of the fuel subsidy has resulted in an astounding yearly savings of $7.5 billion.
Sunday Dare, the president’s special adviser on media and public communications, revealed this information in a bulletin outlining some of President Tinubu’s accomplishments in the oil industry.
Dare outlined significant achievements, such as five recently issued executive directives that are anticipated to unlock $2.5 billion in investments in oil and gas.
Another item on the list was establishing two pricing categories for petroleum products—one for trucks and one for sea.
“Positive notes from President Bola Tinubu’s oil and gas sector reforms. Saved Nigeria $7.5 billion previously spent on oil subsidy.”
“Five new Presidential Executive Orders to immediately unlock $2.5 billion immediately in new oil and gas investments.”
“New two pricing tires for those transporting via the shop and those transporting via trucks,” the report said in part.
Background
On May 29, 2023, President Bola Tinubu declared that the well-liked but expensive fuel subsidy would be eliminated.
The president said the subsidy was “gone” in his inaugural speech.
The price of PMS increased significantly due to this statement, going from N180 to roughly N620 per litre and then skyrocketing again a year later to about N1,200 at retail filling stations.
- In fact, eliminating the subsidy has allowed the nation to conserve limited resources that could have been used for infrastructure, health care, or education.
- Although there isn’t any hard evidence on the amount of money the government has saved due to the downstream sector’s complete deregulation, several estimates have been hypothesized.
- Wale Edun, the country’s finance minister, stated in a recent interview that the country has saved at least N20 trillion since the subsidies were eliminated.
- His remarks provoked much online discussion, with many people wondering why the government is still trying to borrow $2.2 billion to cover some of the 2024 budget deficits if such savings have already been realized.
What To Note
The federal government completely phased away the fuel subsidy due to a number of issues.
The federal government removed provisions for the subsidies from the supplemental budget after President Tinubu declared them “gone.”
- However, NNPC was left to foot the bill for the implicit subsidy since fuel was initially set at N620 per liter despite the naira devaluing significantly and the price of crude oil rising.
- NNPC later said that it could no longer subsidize imported petrol, citing debts of almost $6 billion owing to oil dealers.
- As a result of these changes, the downstream industry was completely deregulated, and depending on the location, gasoline prices today range from N1,200 to N1,400 per liter.
