Nigeria spends N18.39bn daily on fuel subsidy – finance minister

By our reporter| The Minister of Finance, Zainab Ahmed, on Thursday, put the projected daily payment for fuel subsidy at N18.39 billion.

Ahmed made the disclosure during an investigative hearing of the House ad hoc committee which is investigating the petroleum subsidy regime between 2017 to 2021.

“The total amount of subsidy per day is 18.397 billion per day,” she said. “So if you are projecting for the full year, it would be 6.715 trillion. If you are projecting for half year, it would be 50 percent of that.”

According to her, this was calculated using the information provided by the Nigerian National Petroleum Company (NNPC) and the regulator.

The information, she explained, showed that 64.96 million litres of fuel is the projected average daily truck out, while N1.774 trillion was paid to independent oil marketers as subsidy in four years.

The world bank had in the past repeatedly called for the removal of subsidy by the federal government, as the current petrol subsidy regime poses an “existential threat” to Nigeria.

Rajul Awasthi, senior public sector specialist, domestic resource mobilisation, World Bank, made the disclosure at a virtual pre-summit themed ‘Critical Tax Reforms for Shared Prosperity’, organised by the Nigerian Economic Summit Group (NESG) on Wednesday.

According to Awasthi, Nigeria is in an unfavourable economic situation due to dwindling revenue, the continued payment of trillions of naira on fuel subsidy by the government, and the attendant economic challenges.

He maintained that Nigeria would have no choice but to get rid of subsidy eventually.

In a slide he shared during his presentation, which showed Nigeria’s Development Update (NDU), Awasthi said that between 2015 and 2019, Nigeria’s non-oil revenue was among the lowest in the world and as a result the second lowest in spending.

He said that the country’s oil revenue was also falling even when oil prices were higher.

“Nigeria has the largest economy in Africa and the largest country in Africa by population, so it is critical to Africa’s progress. There is no doubt about that,” Awasthi said.

“But the government of Nigeria, from the public finance perspective, is facing an existential threat. Let’s not downplay the situation. That is the actual reality.