Details have emerged about how the Nigerian government under Bola Tinubu has been making payments for subsidy on petrol, despite repeated denials.
According to a Premium Motor Spirit (PMS) data pricing framework, the government pays an average of N501.47 as subsidy on each litre of fuel in at least eight Nigerian cities.
This discovery comes after President Bola Tinubu announced the removal of subsidies in May 2023, leading to an increase in fuel prices and subsequent hardship for many Nigerians.
However, a fresh report shows that the government has been paying subsidies, with Lagos State receiving N499.24 per litre, Abuja receiving N488.04 per litre, and other cities receiving similar amounts.
A breakdown of the subsidies by state are as follows:
Lagos: N499.24; Abuja: N488.04; Kano: N496.34; Calabar: N490.18; Sokoto: N501.75; Maiduguri: N498.42; Ibadan: N495.30; Enugu: N542.49.
The subsidies are calculated based on the difference between the indicative pump price and the actual pump price, with the government covering the shortfall.
These subsidies are paid to maintain a lower pump price for consumers, despite the higher indicative pump price based on the foreign exchange rate.
It should be recalled that the government’s denial of subsidy payments has been contradicted by various sources, including a former governor of Kaduna State, Nasir El-Rufai, and the International Monetary Fund (IMF), which reported that the Nigerian government reintroduced petrol subsidy at the end of last year.
The IMF estimated that subsidy payment would gulp almost half of Nigeria’s projected oil revenue this year, amounting to N8.43 trillion.
Meanwhile, the Nigerian National Petroleum Company (NNPC) Ltd has been struggling to pay for petrol subsidy, with reports indicating that it may not be able to sustain petrol imports due to the increasing subsidy bill.
