Nigerian Government Admits Fuel Subsidy to Cost N5.4 Trillion in 2024

The Nigerian government has acknowledged that the fuel subsidy will cost N5.4 trillion in 2024, contradicting earlier claims of complete deregulation of the product. This admission was made by the Minister of Finance, Wale Edun, during the presentation of the Accelerated Stabilisation and Advancement Plan (ASAP) report.

The ASAP report, aimed at addressing critical challenges affecting reform initiatives and stimulating development across various sectors of the economy, highlighted the growing burden of the fuel subsidy. “At current rates, expenditure on fuel subsidy is projected to reach N5.4 trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022,” Edun stated.

Contradicting this position, Heineken Lokpobiri, Minister of State for Petroleum Resources, Oil, asserted during a recent ministerial briefing marking President Bola Tinubu’s anniversary that the fuel subsidy had been completely removed. “I can confirm to you that subsidy is gone; officially, there is no subsidy; I want to make it clear that there is no subsidy in the country today,” Lokpobiri claimed.

This comes after the President of the Trade Union Congress, Festus Osifo, revealed in April that the Nigerian government was still applying a quasi-subsidy on fuel. The controversy over the subsidy began with President Tinubu’s declaration in June 2023 that the subsidy had been removed, leading to a significant increase in pump prices from N250 per litre to over N500.

Since the removal announcement, fuel prices have continued to rise, with an average price of N702 per litre recorded in April 2024. The combined impact of the fuel subsidy and the floating of the Naira in June last year has seen Nigeria’s headline inflation and food inflation soar to 33.69 percent and 40.53 percent, respectively, by April 2024.