Government Denies Petrol Subsidy Despite N501 Average Payment in Eight Cities

By Newsroom

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Newsroom

Posted: August 30, 2024 at 11:37 am, Updated: August 30, 2024 at 11:37 am

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Key Points

Subsidy Revealed: Despite government claims of petrol subsidy removal, a recent report shows that Nigeria is paying an average subsidy of N501.47 per litre of petrol in eight cities.
Government Denials: President Bola Tinubu’s administration has publicly denied reintroducing subsidies, citing the Petroleum Industry Act and policy decisions as evidence of subsidy elimination.
Financial Impact: The IMF estimates that the reintroduced subsidies will cost Nigeria about N8.43 trillion, nearly half of its projected oil revenue for the year. The NNPC Ltd has requested to use 2023 dividends to cover these costs, potentially affecting its financial stability.

Government Denies Petrol Subsidy Despite N501 Average Payment in Eight Cities

Lagos, Nigeria Despite official denials, the Nigerian government continues to pay an average subsidy of N501.47 per litre of petrol in at least eight cities, a recent review by PREMIUM TIMES reveals.

On August 21, 2024, data from the Premium Motor Spirit (PMS) pricing framework indicated that the government is subsidising each litre of fuel by this amount in cities including Lagos, Abuja, Kano, and Calabar.

President Bola Tinubu announced the removal of the petrol subsidy on May 29, 2023, aiming to reduce financial burdens on the government. This move led to a sharp increase in fuel prices, from N197 to between N480 and N570, which in turn raised transportation costs and prices for goods and services.

By July 2023, the petrol pump price had been further increased to N617 per litre at Nigerian National Petroleum Company Limited (NNPC Ltd) outlets.

Recent reports suggest that, despite the official stance, the government has partially reintroduced the petrol subsidy to maintain the pump price at N617. This adjustment comes amid a declining naira and fluctuating crude oil prices.

The National Emergency Management Agency (NEMA) data shows the following subsidy payments across various cities:

Lagos: The indicative pump price was N1,067.24, while the actual price was N568, indicating a subsidy of N499.24.
Abuja: The indicative price was N1,105.04, with the actual price at N617, resulting in a subsidy of N488.04.
Kano: The indicative price was N1,116.34, and the actual price was N620, showing a subsidy of N496.34.
Calabar: The indicative price was N1,081.18, with the actual price at N591, leading to a subsidy of N490.18.
Sokoto: The indicative price was N1,121.75, while the actual price was N620, reflecting a subsidy of N501.75.
Maiduguri: The indicative price was N1,135.42, with the actual price at N637, showing a subsidy of N498.42.
Ibadan: The indicative price was N1,075.30, and the actual price was N580, indicating a subsidy of N495.30.
Enugu: The indicative price was N1,142.49, while the actual price was N600, leading to a subsidy of N542.49.

Former Kaduna State Governor Nasir El-Rufai previously noted that the petrol landing cost implies a form of subsidy, regardless of official claims. However, Minister of Budget and Economic Planning Atiku Bagudu has insisted that the Tinubu administration has fully removed the subsidy, citing the Petroleum Industry Act and the policy decision to end subsidy payments.

The International Monetary Fund (IMF) has reported that the government reintroduced the subsidy late last year, estimating that it will cost nearly half of Nigeria’s projected oil revenue, amounting to N8.43 trillion out of a forecasted N17.7 trillion.

In a recent draft of the Accelerated Stabilisation and Advancement Plan (ASAP), the government projected that fuel subsidies would reach N5.4 trillion by the end of 2024, up from N3.6 trillion in 2023.

Additionally, reports indicate that President Tinubu approved using the 2023 final dividends of the NNPC Ltd. to cover the subsidy costs. The NNPC Ltd. has claimed that these payments have strained its finances, impacting its ability to remit taxes and royalties to the federation account.