The administration of President Bola Tinubu has spent an estimated N15.1 trillion on petrol subsidies over the past 14 months, surpassing previous spending and raising concerns about the growing financial strain on Nigeria’s economy.
Data from the National Bureau of Statistics (NBS) and petroleum marketers indicate that Nigeria imported an average of 1.95 billion litres of petrol each month between June 2023 and July 2024, amounting to a total of 27.3 billion litres. With the landing cost of petrol set at N1,203 per litre, and the Nigerian National Petroleum Corporation (NNPC) Retail selling at N650 per litre, the subsidy per litre totals N553.
Despite President Tinubu’s declaration during his May 29, 2023 inauguration that the fuel subsidy would be discontinued, the expenditure on subsidies under his administration has surpassed the N10.7 trillion spent by former President Muhammadu Buhari between 2016 and mid-2023. This surge in costs is partly due to the naira’s devaluation following the liberalization of the foreign exchange market in 2023, which saw the currency lose over 60% of its value.
Economic experts are increasingly concerned about the sustainability of these subsidies. Kelvin Ayebaefie Emmanuel, CEO of Dairy Hills, emphasized that accurate tracking of daily petrol consumption is key to managing the costs associated with under-recovery in petrol subsidies. He also highlighted the role of crude oil prices and exchange rates in determining the subsidy burden. “The only way to achieve non-payment is to have the Naira to USD pair at 750 and Brent prices at $75 per barrel,” Emmanuel said.
Analysts caution that as long as Nigeria continues to import petroleum products and faces an unstable exchange rate, the high subsidy costs will remain a significant drain on the economy. The government now faces a difficult challenge of balancing economic realities with public dissatisfaction over rising fuel prices.
