Hello Nigerians, let’s talk about FUEL SUBSIDY!

• In 13 years, Nigeria spent at least N10 trillion on subsidy
• NNPC cabal possibly swallowed extra N11.8bn subsidy in June 2017
• Despite equalization subsidy, petrol is sold above N145/liter in some states

THREAD

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Before we delve into the dilemma of Nigeria's subsidy regime, here's the country's profile:

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At least N10 trillion has been spent on petrol subsidy from 2006 - 2018. This could fund the construction of 27,000MW of solar-powered electricity to create stable electricity.

Which would you prefer? Stable power supply or cheap fuel? Tell us in the comment section

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Nigeria's government spent at least $10.85billion from the Excess Crude Account (ECA) on fuel subsidy. Of the $180billion accrued to ECA which is supposed to be a fiscal buffer since 2004, only $249m is left as at December 2018.

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Nigeria imports over 91% of its petrol. No matter which government promises to reduce the cost of petrol subsidy. Once crude oil price goes up or Naira is devalued, imported petrol becomes more expensive & subsidy bill will shoot up to maintain the regulated price

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Despite oil revenue spent on equalization subsidy, petrol is still sold above N145 in many parts of Nigeria. Here are the top 3 states with the most expensive petrol from NBS Petrol Price Watch, January 2019

Taraba: N150.27
Gombe: N150.20
Bayelsa: N150

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Some of Nigeria's subsidized fuel is smuggled to neighboring countries. Like Nigeria, Venezuela with the cheapest petrol in the world loses $18 billion annually to petrol smugglers who sell its subsidized fuel in neighboring Colombia.

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NNPC is now the major petrol importer. In June the Expected Open Market Price (EOMP) was N144.20, lower than regulated price of N145 per liter. Why did NNPC collect N11 billion subsidy in that month when there was nothing to be subsidized?

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#LestWeForget 21 companies were indicted for defrauding Nigeria of N382 billion petrol subsidy in 2011. 8 Years later, has justice been served in all the cases? Have all the funds been returned to Nigeria?

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Nigeria's population is projected to grow from 196 million to 398 million by 2050. So will the country's subsidy bill. How will Nigeria sustain a petrol subsidy burden for 398 million Nigerians?

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At BudgIT we recommend that petrol subsidy should be removed to free up money for other capital projects. Four sectors should be prioritized - Transportation, Power, Health and Education.

What is your opinion on subsidy? Let us know in the comment session.



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Read more in our policy brief.

http://fixouroil.com/infographics/nigerias-petrol-subsidy-regime/



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