THE NEWS CHRONICLE’s calculations show that in the previous 14 months, President Bola Tinubu’s administration has spent N15.096 trillion on petrol subsidies.
Petroleum marketers’ information and data from the National Bureau of Statistics (NBS) were used to determine the value of the subsidy spending under Tinubu.
Nigeria imports 1.95 billion litres on average every month, ranging from 1.4 billion to 2.5 billion litres, according to the NBS. The nation has used 27.3 billion litres in the course of 14 months, from June 2023 to July 2024.
However, independent marketers claim that the cost of landing a litre of petrol plus other logistics expenses is N1,203.
At its stations, NNPC Retail sells gasoline for N650 per litre, meaning that there is an N553 difference for every litre of fuel.
Given the N553 difference and the 27.3 billion litres used in just 14 months, the Tinubu administration is estimated to have spent N15.097 trillion during that time.
The CEO of Dairy Hills, Kelvin Ayebaefie Emmanuel, stated that Nigeria must first be truthful about how many litres of gasoline the nation uses.
“Determining the actual daily consumption is the first step in addressing the cost of under-recovery on the premium motor spirit (PMS) subsidy.”
The price of crude oil and the currency rate are the other two significant factors contributing to the resurgence of under-recovery. He stated that the Naira to USD pair at 750 and the price of Brent at $75 per barrel are the only ways to achieve non-payment.
“For this reason, the government must modify its obligations regarding the domestic supply of crude oil and ensure that domestic refineries have the feedstock they need to integrate production backwardly.”
In his inauguration speech on May 29, 2023, President Bola Tinubu stated that petrol subsidies had been removed. But it’s now greater than what was being paid before his ascent to prominence.
Between 2016 and the first half of 2023, Nigeria’s former president Muhammadu Buhari spent N10.7 trillion on petrol subsidies.
But Tinubu’s spending on petrol subsidies in a single year has surpassed that. This is ascribed by analysts to the naira’s decline following the deregulation of foreign exchange in 2023.
According to observers, the value of the Naira has decreased by almost 60% since the present administration liberalized it. On Tuesday, one dollar was worth N1,592.06, compared to N740 on June 1, 2023.
Mele Kyari, the group CEO of Nigerian National Petroleum Company (NNPC) Limited, disclosed that the nation was spending more than N400 billion a month on fuel subsidies a week before the 2023 presidential election that resulted in the new administration.
However, Kyari informed the media on Monday in a widely shared video that the state-owned business was not providing fuel subsidies.
“I told you there is no subsidy whatsoever. We are recouping all of our expenses from the products that we import.”
“We understand why the marketers are unable to import. We hope they accomplish this soon, and these are some of the measures the administration is implementing. There is no subsidy,” he stated.
However, the News Chronicles study shows that as of Monday, August 19, 2024, the landing cost of petrol per litre is more than N1,200, even if the retail price of petrol is between N650 and N750 nationwide.
“After reviewing the analysis, the government has acknowledged that the subsidy is back and larger,” stated Jide Pratt, TradeGrid’s country manager and AIONA’s chief operating officer.
According to Pratt, the subsidies prior to Tinubu’s administration were approximately N50–N60 per litre based on the exchange rate and the fuel index.
President Bola Tinubu has authorized NNPC Ltd.’s proposal to use the 2023 final dividends owed to the federation to cover the cost of the petrol subsidy, according to a recent article by The Cable.
According to sources close to the presidency, the report said that the president also gave his approval to postpone paying the federation’s 2024 interim dividends to increase NNPC’s cash flow.
Furthermore, the National Oil Company informed the President that due to the subsidy payments – which it referred to as a “subsidy shortfall/FX differential” – it will not be able to send taxes and royalties to the Federation account for the time being.
The state-owned oil firm in Nigeria is still the only importer of fuel, even with the implementation of the Petroleum Industry Act of 2021 and the liberalization of the downstream sector, which allows licensed commercial oil marketers to import petrol.
Nevertheless, private marketers have found it difficult to obtain the foreign exchange required for the importation of gasoline, which has left them dependent on the state-owned oil corporation.
Over nine months after President Bola Tinubu proclaimed the liberalization of the downstream petroleum sector, over ninety licensed petroleum marketers in Nigeria are no longer in operation because they are unable to import goods because of unresolved price disparities.
