President Bola Tinubu’s administration has spent a staggering N15.096 trillion on petrol subsidies in the last 14 months, BusinessDay reports.
This figure is based on data from the National Bureau of Statistics (NBS) and petroleum marketers.
Nigeria’s petrol imports average 1.95 billion litres per month, resulting in the consumption of 27.3 billion litres between June 2023 and July 2024. Independent marketers peg the landing cost of petrol and logistics at N1,203 per litre, while NNPC Retail sells it at N650 per litre. The price differential of N553 per litre translates to an estimated N15.097 trillion in subsidy costs over 14 months.
Kelvin Ayebaefie Emmanuel, CEO of Dairy Hills, emphasized that Nigeria must establish the true volume of daily petrol consumption to tackle subsidy costs effectively. Other factors driving the resurgence of subsidy payments include crude oil prices and the naira’s depreciation. Emmanuel suggested ensuring domestic refineries receive the crude oil needed to reduce reliance on imports.
In contrast, President Tinubu’s inauguration speech on May 29, 2023, proclaimed the end of the petrol subsidy. Yet, the subsidy bill has exceeded the N10.7 trillion spent by former President Muhammadu Buhari between 2016 and mid-2023. The sharp devaluation of the naira, which has lost more than 60% of its value since the currency was liberalized, is a key contributor.
While the NNPC group CEO Mele Kyari stated in a recent video that the company is not paying subsidies and is recovering its costs, market realities contradict his claim. With the landing price of petrol now over N1,200 per litre, the government is effectively subsidizing the difference, further straining the nation’s finances.
Analysts attribute this subsidy burden to exchange rate fluctuations and increased import costs. Private petroleum marketers remain inactive, unable to source foreign currency for imports, leaving NNPC as the sole importer. Meanwhile, petrol scarcity persists, with prices at some filling stations reaching N900 to N1,000 per litre.
Experts, such as PwC Nigeria’s Pedro Omontuemhen, argue that the government is absorbing the subsidy cost, regardless of official denials. He notes that global economies also provide subsidies in various forms, although Nigeria’s situation has worsened revenue shortfalls. The government’s reliance on NNPC remittances is diminishing as subsidy costs soar, leading to a critical impact on national revenue.
Until Nigeria halts petrol imports and stabilizes the exchange rate, the country may remain trapped in a cycle of high fuel prices and growing subsidy obligations. The situation has left the Tinubu administration grappling with economic fallout and widespread discontent.
