Cities With Ongoing Fuel Subsidy Payments Despite Government Rejections

Cities With Ongoing Fuel Subsidy Payments Despite Government Rejections....KINDLY READ THE FULL STORY HERE▶

In a surprising development, the Nigerian government is reportedly subsidizing petrol at an average of ₦501.47 per litre in at least eight cities, according to a pricing framework obtained by Premium Times. This revelation contradicts the government’s earlier assertions that fuel subsidies were abolished following President Bola Tinubu’s announcement in May 2023……CONTINUE READING

Data from Premium Motor Spirit (PMS) pricing for August 21, 2024, highlights this hidden subsidy, which contrasts with the government’s claim of ending the subsidy. Tinubu had declared the subsidy removal in his inaugural speech on May 29, 2023, to reduce the financial burden on the government. This led to a significant rise in fuel prices, from ₦197 to between ₦480 and ₦570 per litre, causing widespread economic hardship due to increased transportation costs and rising prices of goods and services.

In July 2023, the pump price was further raised to ₦617 per litre at Nigerian National Petroleum Company Limited (NNPC Ltd) outlets nationwide. However, recent reports suggest that the government has quietly reintroduced a subsidy to keep the price stable despite a depreciating naira and increasing international crude oil prices. This has raised concerns about the government’s transparency regarding subsidy management.

Despite these findings, the government maintains that no subsidy is being paid, arguing that the removal was essential for long-term energy security and economic stability. Nevertheless, the pricing framework reveals that the government is subsidizing petrol by approximately ₦501.4 per litre in cities such as Lagos, Abuja, Kano, Calabar, Sokoto, Maiduguri, Ibadan, and Enugu.

For example, in Lagos, the indicative pump price was ₦1,067.24, while the actual price was ₦568, showing a subsidy of ₦499.24. In Abuja, the indicative price was ₦1,105.04, compared to an actual price of ₦617, indicating a subsidy of ₦488.04. Similar patterns are observed in other cities, with subsidies ranging from ₦490.18 in Calabar to ₦542.49 in Enugu.

Former Kaduna State Governor Nasir El-Rufai had previously suggested that some form of subsidy was still being paid, regardless of official statements. However, Minister of Budget and Economic Planning Atiku Bagudu has insisted that the Tinubu administration has eliminated petrol subsidies, citing the Petroleum Industry Act and the government’s policy decisions.

Contradicting this, the International Monetary Fund (IMF) reported that Nigeria reintroduced petrol subsidies at the end of last year, with subsidy payments expected to consume almost half of the country’s projected oil revenue. The IMF estimates that the implicit subsidy will cost around ₦8.43 trillion out of a projected ₦17.7 trillion in oil revenue.

A draft report of the Accelerated Stabilisation and Advancement Plan (ASAP) presented to Tinubu in June projects that fuel subsidies will reach ₦5.4 trillion by the end of 2024, compared to ₦3.6 trillion in 2023. Additionally, TheCable reported last week that Tinubu approved using the 2023 final dividends from NNPC Ltd to cover the petrol subsidy. The NNPC Ltd has indicated that it is struggling with cash flow issues due to the subsidy payments, which it blames on forex pressures.

Despite this, the Chief Financial Officer of NNPC Ltd, Umar Ajiya, recently announced a net profit of ₦3.297 trillion for the financial year ending December 2023, claiming that the company is not paying petrol subsidies but is managing shortfalls in importation costs.

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