FG spent N650.2 billion on petrol subsidy within a year –New report

A new report by the Nigerian National Petroleum Corporation (NNPC), has revealed that the Federal Government spent a total of N650.2 billion on petrol subsidy between April 2018 to March 2019.

Breakdown: According to the report from NNPC, petrol subsidy gulped N104.35 billion in January 2019, which is the highest amount spent on subsidy during the 12 months.

This was however followed by N102.34 billion that was spent in February this year.

Further analysis of the report has it that subsidy gulped N52.5 billion, N60.6 billion, N80.2 billion, N51.2 billion, N65.9 billion and N45.8 billion in April, May, June, July, August and September 2018, respectively.

In October, November and December 2018, the government, through the NNPC, spent N40.5 billion, N2.9 billion and N13.3 billion, respectively.\

[READ MORE: IMF tells Nigeria to remove fuel subsidy, gives reasons why]

For March 2019, the Federal Government spent N30.6 billion on subsidy.

Note that the lowest amount spent on subsidy was N2.88 billion which was in November 2018.

What you should know: It is common knowledge that petrol is imported into the country by the NNPC. The corporation subsidises the commodity to ensure that it is not sold above N145 per litre at filling stations across the country.

The NNPC, however, classifies its subsidy spending as under-recovery, which is the additional cost that incurred in subsidising the price of petrol in order to ensure that it is sold at the regulated price of N145 per litre, even when the real market price is above this regulated rate.

Is subsidy payment healthy for the economy? Fuel subsidy in Nigeria has been a subject of discussion among the stakeholders of the country’s economy. In what appears to be another attempt to save the country’s economy which presently bites, the International Monetary Fund (IMF) had reiterated the need for Nigeria and other countries that still retain the policy of subsiding fuel consumption to put an end to the policy.

[READ ALSO: Here’s why IPMAN is reducing pump price of petrol]

In a blog post titled, “Fuel for Thought: Ditch the Subsidies”, the IMF made known that the fuel subsidy which some countries pay as an attempt to reduce the price of fuel for consumers, typically benefits the rich more than the poor.