The Minister of Finance, Budget and National Planning, Zainab Ahmed, has revealed that the Federal Government spends an estimated N18.39 billion daily as petrol subsidy payments.
This was made known by Ahmed while appearing before the House of Representatives Adhoc committee set up to investigate the petroleum products subsidy regime from 2013 to 2022.
The minister who was grilled by the investigative committee over the funding of these subsidy payments, said that the Nigerian government is projecting the country will be spending N6.715 trillion for the full year, that is from January to December.
What the Finance Minister is saying
Ahmed in her explanation said, “For 2023, the projection is that the average daily truck-out will be N64.96 million per day; that is about 65 million per day, using an average rate at open market rate of N448.20 and then a regulator pump price of N165 per litre. This gives us an average under-recovery, that is the difference between N165 and N448, of N283.2.”
“So, just multiply the amount of litre per day, the open market exchange rate of naira to the dollar and then, the gap between the pump price and open market price, the total amount of subsidy per day is N18.397bn.
“So, if you are projecting for the full year, from January to December, it will be N6.715 trillion. If you are projecting for half a year, it will be 50 percent of that, 3.375tn. I said earlier in the recommendations that we sent to parliament for consideration on MTEF is half-year, that will be N3.357 trillion.
“Fuel subsidy is the difference between the pump price which is now fixed at N165 (per litre) and the landing cost which we are projecting at an average of N448 per litre in 2023. Even now, the cost is around that.
“So, the PMS subsidy we are carrying today in the nation is around N283 per litre; that is what we are carrying. So, it is the difference between the pump price and the landing cost of petroleum products in the country.”
What you should know
- The House of Representatives had some days ago, unveiled plans to investigate over 200 accounts being operated by Nigerian National Petroleum Corporation (NNPC) Limited with a view to ascertaining the public funds spent on payment of fuel subsidy from 2013 to date.
- The Federal Government had already paid the sum of N2.6 trillion as petrol subsidy claims in the first half of 2022.
- The petrol subsidy payment has become very controversial and contentious issue as many Nigerians have at different times expressed doubts over such heavy expenditure.
If we are spending all these monies on subsidy year in year out, why is it difficult to revive the local refinery? It is obvious money is not the excuse
Why are we like this?
This amount is mind-blowing and appears highly inflated. Let one of the top international audit firms be engaged to verify these figures. Also, I am certain a sizeable percentage of the subsidized petrol end up in neighbouring countries thru smuggling, hence we are subsidizing for our neighbors also when we can barely afford to provide for ourselves.