News

Tinubu’s petrol subsidy gulps N15trn as scarcity worsens

Published

9 months ago

August 21, 2024

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.

Naira has lost more than 60 percent value since it was liberalised by the current administration, analysts say. A dollar exchanges for N1,592.06 on Tuesday as against N740 on June1, 2023.

A week before the 2023 presidential election, which led to the new administration, Mele Kyari, group CEO of Nigerian National Petroleum Company (NNPC) Limited, revealed that the country was spending more than N400 billion monthly on fuel subsidies.

But on Monday, in a viral video, Kyari told the press that the state-owned company was not paying fuel subsidies.

“I told you there is no subsidy whatsoever. We are recovering our full costs from the products that we import.

“We understand why the marketers are unable to import. We hope that they do this very quickly and these are some of the interventions the government is doing. There is no subsidy,” he said.

BusinessDay’s analysis, however, has revealed that while the retail price of petrol stands between N650 and N750 across the country, the landing cost of petrol per litre is over N1,200 as of Monday, August 19, 2024.

“The government has seen the analysis and has now recognised the subsidy is back and bigger,” said Jide Pratt, chief operating officer of AIONA and Country Manager of TradeGrid.

Pratt said that the subsidy levels before Tinubu’s government were circa N50/N60 naira per litre using the gasoline index and the exchange rate.

He said: “A few months ago it was in the N200 per litre range. The exchange rate has been all over the place and this affects the landing cost of the sole importer of PMS, which is the NNPC.

“It was hard to justify how NNPC Retail had an N42 price advantage over other marketers who buy from her. It was very odd to justify in a petroleum market with slim margins.

“But I guess the chicken has come home to roost. The queues we keep witnessing albeit now longer and more frequent are a testament to maybe struggles with payment as and when due.”

According to a recent report by The Cable, President Bola Tinubu has approved a request by the NNPC Ltd to utilise the 2023 final dividends due the federation to pay for petrol subsidy.

The report showed that the president also approved the suspension of the payment of 2024 interim dividends to the federation in order to augment NNPC’s cash flow, according to presidency sources.

In addition, the national oil company told the president it will be unable to remit taxes and royalties to the federation account for now because of the subsidy payments, which it termed ‘subsidy shortfall/FX differential’.

Despite the Petroleum Industry Act of 2021 and the deregulation of the downstream sector, which permits licensed private oil marketers to import petrol, the state-owned oil company remains the only importer in Nigeria.

However, private marketers have struggled to access the foreign currency needed for petrol imports, forcing them to rely on the state-owned oil company for supply.

Over 90 licensed petroleum marketers in Nigeria have been unable to import products due to unresolved price differences, leaving them inactive nearly nine months after President Bola Tinubu announced the deregulation of the downstream petroleum sector.

“If you look at the price of international crude, and you compare the refined products across Africa, how much is the landing price? Right now, every refined product you have is imported,” said Pedro Omontuemhen, partner & Africa oil and gas leader, PwC Nigeria.

“When you compare the international price, landing price, and the state of price (in the country), that means the difference is being borne by the government, either directly or through some of the government agents.”

According to Omontuemhen, it doesn’t matter what the government is saying as the reality of things in the country continues to show that someone is paying for the subsidy.

“One thing we should be aware of is that there are subsidies everywhere in the world. Another name for subsidy is a grant. They are all over the world.”

Negative impact on government revenue

Petrol scarcity has worsened across the country, with a litre selling at N900 and N1,000 at some filling stations in Lagos, Abuja, Port Harcourt, Kano and other parts of Nigeria. Petrol stations selling at N650-N750 often have long queues.

Muda Yusuf, chief executive officer of Centre for Promotion of Private Enterprise, said the current economic situation has necessitated the open acceptance of the subsidy payment, noting that the petrol product is already being subsidised.

“Obviously, this affects government revenues because remittances from NNPC is one of the major sources of revenue for the government. If that is removed, we will be left with just revenues from taxes and forex gains. And when you talk about the tax revenues, a lot of it has been taken off by tax credits being offered to some companies.”

Yusuf said that the current price of fuel, which ranges from N617 to N1,000 across the country, is already being subsidised by the government.

He explained that the prices of fuel may remain high until Nigeria stops the importation of petroleum products.

“It is a dilemma for the government also as they are in a tight corner. Look at the recent nationwide protest, which was because of the sufferings occasioned by fuel subsidy removal.

“With the exchange rate, the amount we currently pay for fuel has a huge subsidy component – just that the government is not open to us. Until we stop fuel importation, we may not get any relief from the high price of petrol,” he further said.

Ken Ife, lead consultant on private sector development to the ECOWAS Commission, said that the government has always subsidised the price of petrol, which is why it could be sold for less than N1,200 per litre.

“The price of petrol should be at about N1,200, but we still get to buy at N600 plus, which means somebody is paying for subsidy somehow and I do not see the price of per litre dropping anytime soon.

“And if the price must drop, then some things must be done and they include ensuring that Dangote receives sufficient crude and it is allowed to pay in Naira. Also, the NNPC must also buy refined crude from Dangote.

“Another issue of concern is that the NNPC has almost securitised all of its crude. So, we do not know how much it has left, but it is important we ensure that Dangote Refinery gets sufficient crude in naira. Also, if the NNPC continues to import refined petrol with all the cost payable in dollars, this may cause the price of PMS to remain high,” he added.

News

Enugu Reps PDP Caucus Welcomes LP Members To Its Fold

Published

2 hours ago

May 6, 2025

ADMIN

Members of the Enugu State Caucus of Peoples Democratic Party, ( PDP) in the House of Representatives, Rt. Hon. Nnolim Nnaji , Rt. Hon. Martins Oke and Hon Anayo Onwuegbu have welcomed Rt. Hon. Dennis Agbo and Hon. Chidi Mark Obeta of Labour Party, (LP) to the PDP fold.

They observed that the visionary leadership of Dr Peter Ndubuisi Mba in Enugu State has ignited massive decamps and unprecedented upsurge of membership of the Peoples Democratic Party, (PDP) in the state.

The caucus in a statement issued after the two members of the House of Representatives, Rt. Hon Dennis Agbo of Igboeze North/ Udenu and Chidi Mark Obeta who represents Nsukka/Igboeze South formally announced their transfer of membership to PDP at the resumption of House plenary on Tuesday said it was gladdening to receive them into the PDP fold.

They stressed that PDP in Enugu State was witnessing a great rebirth as a result of the transformative development agenda being unleashed in various sectors of the economy of the state by Governor Mba which has received global commendations.

The Enugu State caucus Leader, Rt. Hon. Nnolim Nnaji on behalf of the members further noted that Governor Mba’s investments in infrastructure, agro economy, and security among others have made Enugu State a tourist’s haven adding that with the good governance structure he has put in place, his second tenure would be a walkover.

News

2025 budget: Tinubu Seeks NASS Approval For N1.784trn FCT Statutory Budget

Published

3 hours ago

May 6, 2025

Gloria Ikibah

…allocate 85% for completion of ongoing projects, 15% new projects

By Gloria Ikibah

President Bola Tinubu is seeking approval of the National Assembly for the sum of N1.784 trillion statutory budget of Federal Capital Territory (FCT) for the year ending 31st December, 2025.

This was contained in a letter from the President Tinubu to Speaker Tajudeen Abbas on Tuesday at plenary.

The letteer reads: “In pursuant to section 299 of the constitution of Federal Republic of Nigeria, 1999 as amended, which based legislative powers over the Federal Capital Territory, FCT Abuja on the National Assembly.

“I hereby present the 2025, FCT budget proposal to the House of Representatives for consideration the 2025 FCT budget proposal prioritize investment in healthcare services, job creation, youth empowerment, social welfare services, education infrastructure, as well as increase in productivity in agriculture.

“Our objective is to lift, as many of our citizens out of poverty, as we can.

“The House of Representatives is invited to know that, on the basis of revenue focused for the fct, A total expenditure of 1,783,823,708,392 trillion is propose for the year 2025.

“As such, 85% of capital expenditure is dedicated to the completion of ongoing projects while 15% is for new capital projects so as to sustain ongoing efforts at providing basic infrastructure and social amenities in the FCT

“I hereby forward the 2025 FCT statutory proposals and trust that it would receive expeditious consideration and passage by the House of Representatives.”

News

Finally , DTHA becomes one party assembly as Speaker, 21 other PDP members defect to APC

Published

4 hours ago

May 6, 2025

ADMIN

Speaker of the Delta State House of Assembly, Rt. Hon. Emomotimi Guwor, along with twenty-one other former members of the Peoples Democratic Party (PDP), elected into the Assembly has officially defected to the All Progressives Congress (APC), following a major realignment of political stakeholders across the state.

The defection of the twenty-two lawmakers has effectively transformed the Delta State House of Assembly into a one-party legislature, as the remaining seven members were originally elected on the ticket of the APC.

Announcing the development on Tuesday during the resumption of plenary after the Easter break, the Speaker stated that the decision was the result of extensive consultations with their constituents and political leaders throughout the state.

He emphasized that the move aligned with Section 109 of the 1999 Constitution, as amended.

While expressing appreciation to members for their contributions so far, Guwor urged the House to ensure the completion of all pending bills as the second legislative session nears its end.

He noted that the political shift towards the APC was in response to the realignment of stakeholders and the desire to align with the Federal Government under President Bola Tinubu’s leadership.

“The mass defection of members of the Peoples Democratic Party, led by Governor Sheriff Oborevwori, to the All Progressives Congress was made in the overall interest of Deltans and the state,” the Speaker said.

He explained that the decision followed extensive consultations held on April 23 and which cumulated on the official reception on April 28, 2025, at the Government House and the Cenotaph, respectively.

He said: “We are fully committed to partnering with the Federal Government to deliver greater development to Deltans.

“On behalf of the House, I commend the courage and visionary leadership of our Governor, Rt. Hon. Sheriff Oborevwori, in making this strategic and timely decision.

“As a legislative body, we stand with His Excellency in this endeavour. This renewed partnership between the state and Federal Government must be supported and allowed to flourish, so that we can begin to enjoy its benefits in the shortest possible time.”

He informed the House that he had received twenty-two letters (including his own) notifying of the change of party affiliation from the PDP to the APC.

The defection, he said, was driven by instability within the PDP’s national leadership and factional divisions within the South-South Zonal Executive Committee, leading to internal conflicts and disunity within the party.

Citing Section 109(1)(g) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the Speaker affirmed the constitutional basis for the defection.

“With this action, the Delta State House of Assembly is now composed entirely of members from the All Progressives Congress. We thank our constituents for endorsing this progressive course of action”.

A motion to adopt the letters of party change was moved by the Majority Leader, Hon. Emeka Nwaobi, and seconded by Hon. Ferguson Onwo, who represents Isoko South II.

Speaking to journalists after the plenary, the Majority Leader, Hon Emeka Nwaobi reiterated that the defection was prompted by the crisis within the PDP.

“Our decision was based on the instability at the national level and the factionalization at the South-South level. Consequently, we chose to move to the ruling All Progressives Congress, in accordance with Section 109 of the 1999 Constitution, as amended,” he said.