The smuggling of subsidized petrol depletes Nigeria’s economy by as much as N4.88 trillion yearly, according to the Asiwaju Bola Ahmed Tinubu (ABAT) Media Centre.
A video posted on the ABAT Media Centre Twitter handle on Thursday gave an illustration of how exactly fuel subsidy depleted Nigeria’s economy before it was stopped.
The video even showed that the Federal Government might have spent over N6trn on petrol subsidy from January 2022 to June 2023 higher than the N4trn it planned to spend.
Nigeria, the largest economy on the African continent and a major crude oil producer, however, had a major shift some weeks ago as it ended the payment of subsidy on petrol.
After decades of running a destructive fuel subsidy regime, President Tinubu finally pronounced it dead on May 29, in a move to rescue the economy from the final gasp of ruin.
By January 2023, 12 months after the former Minister of Finance, Budget and National Planning, Zainab Ahmed, said more than 80 per cent of the N4trn earmarked had been spent.
She had also back then announced a gradual removal of the subsidy. The video also showed that about N400bn was spent to subsidise petrol every month which is about N202/l.
Recall that the Group Chief Executive Officer (GCEO) of NNPC Ltd, Malam Mele Kyari, had said the same thing while providing an update on the subsidy.
“We are transferring to each of them (marketers) at N113/l. That means there’s a difference of close to N202 for every litre of PMS we import into this country,” Kyari said.
“In computation, N202 multiplied by 66.5 million litres (daily consumption), multiplied by 30 (days) will give you over N400bn of subsidy every month.”
From the records, subsidy payouts on petrol from 2005 to 2023 gulped over N21 trillion.
Analysts query the reason for sustaining a profligate programme that has drained the nation’s finances without commensurate value-addition to millions of Nigerians.
A recent report by the Nigeria Extractive Industries Transparency Initiative (NEITI) shows that whereas N13.7 trillion was spent on subsidy between 2005 and 2021, N8 trillion was spent between 2022 and the first half of 2023 alone.
A breakdown of annual subsidy spending provided by NIETI in the report shows that in 2005, starting year for the survey, N351 billion was spent while the figures for 2006-2010 were N257 billion, N272 billion, N272 billion, N631 billion, N469 billion and N667 billion. In 2011, spending ballooned to N2.1 trillion.
From 2012-2017, spending on subsidy was N1.36 trillion; N1.32 trillion; N1.2 trillion, N654 billion, N240 billion and N154 billion respectively.
From 2018 to the first half of 2023, the government spent N1.1 trillion; N508 billion; N864 billion N1.43 trillion, N4.4 trillion and N3.6 trillion respectively.
Tinubu in his inaugural speech at the Eagle Square in Abuja after he was sworn in as Nigeria’s 16th President said the era of subsidy payment on fuel has ended.
According to him, the 2023 Budget made no provision for fuel subsidy and more so, subsidy payment is no longer justifiable.
He stated that his government shall instead channel funds into infrastructure and other areas to strengthen the economy.
