Tinubu govt admits spending trillions on fuel subsidy after denials

The Nigerian government has acknowledged spending hefty sums on petrol subsidy it initially removed last year, after repeated denials.

The government of President Bola Tinubu said N3.6 trillion was spent to make the price of petrol cheaper in 2023, and the government plans to spend N5.4 trillion in 2024.

The admission is contained in an economic plan document, titled Accelerated Stabilization and Advancement Plan, submitted by finance minister Wale Edun to President Tinubu on Tuesday.

The plan is aimed at responding to the major economic crisis Nigeria faces, that has seen inflation at a 28-year high, the naira devalued twice in the last year, shortage of foreign currency, high unemployment and an abysmally low purchasing power.

“At current rates, expenditure on fuel subsidies is projected to reach ₦5.4 trillion by the end of 2024, significantly higher than the ₦3.6 trillion spent in 2023 and the ₦2.0 trillion in 2022,” Mr Edun said.

Denying The Obvious

Mr. Tinubu removed the petrol subsidy on his inauguration day last May, causing fuel prices to nearly triple. A month later, the new government devalued the naira by removing controls to allow for freer currency trading.

The two policies, praised as major economic reforms by foreign investors and supported by the IMF and World Bank, led to an unprecedented cost-of-living crisis, affecting millions whose incomes and savings were eroded.

The government reported inflation rate at 33.62% in April, although many Nigerians and experts believe the actual rate could be even higher.

As naira devaluation made dollars more expensive, the cost of importing refined petrol increased, making it difficult for the government to continue raising fuel prices, with citizens already paying up to N750 per litre.

The government resumed paying subsidies but repeatedly denied doing so.

In April, Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil), said, “As far as I’m concerned, the President removed the subsidy, and it remains removed to this day. If anyone claims that subsidies are being paid, it is up to them to provide the evidence, and we will address it accordingly.”