The federal government is reported to have disbursed N169.4 billion in August to maintain the pump price at N620 per litre, effectively resurrecting the fuel subsidy.
According to documents from the Federal Account Allocation Committee (FAAC), examined on September 20 by DailyTrust, the Nigerian Liquefied Natural Gas (NLNG) transferred $275 million in dividends to Nigeria through NNPC Limited in August 2023. NNPC Limited utilized $220 million (equivalent to N169.4 billion at the exchange rate of N770/$) from this sum to cover the PMS subsidy, retaining $55 million. This revelation by FAAC signifies the return of the subsidy, with NNPC now using NLNG dividends to cover its cost.
Despite President Bola Ahmed Tinubu’s numerous assurances that the subsidy had been eliminated, the current price stabilization, coupled with a deteriorating exchange rate and international crude oil prices exceeding $95 per barrel, strongly suggests the subsidy’s revival.
NNPC’s reports to the Federation Accounts Allocation Committee (FAAC) revealed that the petrol subsidy incurred a cost of N1.57 trillion in 2021 alone and an additional N1.27 trillion from January to May 2022. Another N3 trillion was allocated to cover petrol subsidy expenses from June 2022 to June 2023.
This development comes just four months after President Bola Tinubu declared on May 29 that there would be no more petroleum subsidy, citing its absence in the 2023 budget. However, he clarified that the budget included provisions for the fuel subsidy until June. Tinubu also expressed intentions to redirect subsidy funds toward public infrastructure, education, healthcare, and job creation. Nevertheless, the removal of the subsidy led to a significant increase in fuel prices, causing a ripple effect on the economy and resulting in soaring prices across the board.