The N3.92 trillion paid as subsidy on Premium Motor Spirit, often known as gasoline, from January 2020 to June 2022 is greater than the sum of individual federal budgets for health, education, and defence for the same time period.
According to the findings, Nigeria has spent more on gasoline subsidies in the last 30 months than on the ministries of health, defence, and education combined.
An examination of petrol subsidy expenditure and ministerial budgets from January 2020 to the first half of 2022 revealed that, while the Federal Government spent N3.92 trillion on PMS subsidies during the period, its budgets for education, health, and defence were N2.28 trillion, N1.68 trillion, and N3.06 trillion, respectively.
This demonstrates that the government spent more money on gasoline subsidies throughout the 30-month period than it received from the health, education or defence sectors got in the same review period. Further investigation revealed that the total budgets of health, education, and defence in 2020 were N1.922 trillion, while fuel subsidies alone consumed N450 billion.
However, spending on fuel subsidies increased to N1.43 trillion in 2021, while the combined budgets for health, education, and defence were anticipated to be N2.288 trillion that year. The government spent N2.04 trillion on fuel subsidies in the first six months of this year, while the total budgets for health, education, and defence were N2.81 trillion.
Economists and oil and gas specialists informed our correspondent that the Nigerian fuel subsidy impact was not only wreaking havoc on education, health, and defence, but they also asked who it was truly benefitting.
They were not comfortable with the persistent rise in Nigeria’s fuel subsidy amidst the country’s high indebtedness and other economic challenges. They explained that the fuel subsidy cost over the last 2.5 years represented a lost opportunity to invest in key capital resources to raise the literacy, standard of living and security of the average Nigerian.
“Nigeria’s fuel subsidy programme has continued to limit remittances to the Federal Account Allocation Committee by the Nigerian National Petroleum Company Limited for distribution to the Federal Government, states and local government areas,” the President, Petroleum Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, told our correspondent.
Analysts believe that many Nigerians are shouldering the cost of education, health and security through sundry private arrangements, while fuel subsidy offers zero succour.
They explained that a better-incentivised workforce in the health, education and defence ministries was possible by realising savings from subsidy removal or reduction.
They also stated that civil service compensation and the national minimum wage remained a delicate topic as the ongoing strike by the Academic Staff Union of Universities underscored the need to address and lay to rest the civil service compensation and incentives conversation. The Nigerian Economic Summit Group had raised concerns about the impending fiscal crisis in Nigeria following the continued rise in fuel subsidies.
It disclosed this in its September 2022 report titled, “The State of Nigeria’s Economy,” stressing that the Federal Government’s huge fuel subsidy spending had been a drain on the country’s revenue despite the rise in crude oil prices in 2022.
The NESG said the government should cut its fiscal deficit to avert an impending fiscal crisis, highlighting the gradual withdrawal of fuel subsidies as one of the measures to achieve this.
“Embark on the gradual phasing out of the fuel subsidy programme,” the economic think-tank told the Federal Government, stressing that sustaining the programme was “disastrous.”
It added, “Aside from taking a clear position on the fuel subsidy issue, the Federal Government must begin the shutting down phase of subsidy programmes to save the country from impending fiscal crisis.
“Understandably, this suggestion will affect the welfare of the citizens, but it is only in the short term. On the other hand, the more extended effects of sustaining this programme are disastrous.”