In a surprising turn of events, the federal government has finally admitted that Africa’s biggest oil-producing country will spend up to ₦5.4 trillion on oil subsidies in 2024. This comes after months of repeated denials by government officials who insisted there were no subsidies.
The revelation came during Finance and Economy Minister, Wale Edu‘s presentation of the Accelerated Stabilisation and Advancement Plan (ASAP) to President Bola Ahmed Tinubu. The document is the government’s new blueprint for addressing key challenges affecting reform initiatives and stimulating development in various sectors of the economy.
The Emergency Task Force of the Economic Management Team, which the president had established, authored the blueprint, let by Mr. Edun.
The plan aims to expedite economic recovery and mitigate the impact of ongoing reforms. Despite efforts to reduce fuel subsidies, expenditures are projected to reach ₦5.4 trillion by the end of 2024.
The report identifies a range of challenges, including high inflation and constrained revenues. These factors, along with the projected increase in fuel subsidies, clearly demonstrate the need for market-driven pricing and fiscal discipline to ensure economic stability and growth.
“At current rates, expenditure on fuel subsidy is projected to reach ₦5.4 trillion by the end of 2024. This compares unfavorably with ₦3.6 trillion in 2023 and ₦2.0 trillion in 2022,” a draft copy of the ASAP presented by Edun said.
Past Subsidy Denial
The federal government had previously maintained that it would no longer subsidize fuel costs, instead opting for a deregulation policy.
In April, Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil), flatly denied any suggestion that the government was still wasting resources and paying for fuel import subsidies. “As far as I’m concerned, the President removed the subsidy, and it remains removed until today. If anybody says that a subsidy is being paid, it is left to the person to bring up the facts. Then we will talk about them.”
At his inauguration on May 29, newly sworn-in President Bola Tinubu announced that “subsidy is gone.” That statement now hardly reflects reality.
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