BUSINESS DAY
...Economists say subsidy affecting govt revenue
President Bola Tinubu’s administration has spent N15. 096 trillion on petrol subsidy in the last 14 months, according to BusinessDay’s calculations.
The value of the subsidy expenditure under Tinubu was obtained from the National Bureau of Statistics (NBS) data and information from petroleum marketers.
According to the NBS, Nigeria imports between 1.4 billion litres and 2.5 billion litres per month, indicating an average of 1.95 billion litres per month. In 14 months (June 2023-July 2024), the country has consumed 27.3 billion litres.
On the other hand, independent marketers say the landing cost of petrol and other logistics costs stand at N1,203 per litre. The NNPC Retail sells petrol at N650 per litre at its stations, leading to a differential of N553 for each litre of petrol.
With the N553 differential and 27.3 billion litres consumed in 14 months, the amount likely to have been spent over the period by the Tinubu administration is N15.097 trillion.
Kelvin Ayebaefie Emmanuel, CEO of Dairy Hills, said Nigeria must first of all be honest with the number of litres of petrol consumed in the country.
“The first step to address the cost of under-recovery on the premium motor spirit (PMS) subsidy is finding the actual daily consumption.
“The other two major factors that have gone into the re-introduction of under-recovery is the price of crude oil and the exchange rate. The only way to achieve non-payment is to have the Naira to USD pair at 750 and Brent prices at $75 per barrel,” he said.
“This is the reason why the government needs to adjust the domestic crude oil supply obligations and guarantee domestic refineries the feedstock they require to backwardly integrate production.”
President Bola Tinubu in his inauguration speech on May 29, 2023, said petrol subsidy was gone. However, it has grown bigger than the amount being paid before he came to power.
Nigeria’s former President Muhammadu Buhari spent N10.7 trillion on petrol subsidies between 2016 and the first six months of 2023.
In one year, however, Tinubu’s petrol subsidy expenditure has eclipsed that. Analysts attribute this to the naira slump after the foreign exchange liberalisation in 2023.
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