The presidency has revealed that an impressive $7.5 billion is being saved annually from funds previously allocated to fuel subsidy following its removal.
Sunday Dare, the Special Adviser on Media and Public Communications to President Tinubu, shared this on Sunday in a bulletin detailing some of the president’s achievements in the oil sector.
Dare highlighted key milestones, including five new executive orders signed by the president expected to unlock $2.5 billion in oil and gas investments.
Another point on the list was the introduction of two pricing tiers for petroleum products — one by trucks and the other by sea.
“Positive notes from President Bola Tinubu’s oil and gas sector reforms.
“Saved Nigeria $7.5 billion previously spent on oil subsidy.
“Five new Presidential Executive Orders to immediately unlock $2.5 billion immediately in new oil and gas investments.
“New two pricing tires for those transporting via the shop and those transporting via trucks,” the report shows in part.
Backstory
Following his assumption of office on May 29, 2023, President Bola Tinubu announced the removal of the popular but costly fuel subsidy.
In his inaugural speech, the president declared that the subsidy was “gone.”
This announcement led to a significant increase in the price of PMS, rising from N180 to about N620 per liter, and soaring again a year later to approximately N1,200 at retail filling stations.
- The removal of the subsidy has indeed helped the country save scarce resources that could have been allocated to critical sectors such as education, health, or infrastructure.
- However, while there is no concrete data on how much the government has saved from full deregulation of the downstream sector, various figures have been speculated.
- In a recent interview, the Minister of Finance, Wale Edun, claimed that the country has saved no less than N20 trillion since the subsidy removal.
- His statement sparked widespread reactions online, with many questioning why, if such savings have been realized, the government still seeks to borrow $2.2 billion to address some of the 2024 budget shortfalls.
What you should know
Several factors drove the complete phasing out of the fuel subsidy by the federal government.
Following President Tinubu’s declaration that the subsidy was “gone,” the federal government excluded provisions for it in the supplementary budget.
- However, petrol was initially pegged at N620 per liter despite significant naira devaluation and rising crude oil prices, leaving NNPC to absorb the cost of the implicit subsidy.
- NNPC later announced that it could no longer subsidize imported petrol, citing debts of approximately $6 billion owed to oil traders.
- These developments culminated in the full deregulation of the downstream sector, with petrol now selling for between N1,200 and N1,400 per liter, depending on the location.
