Africa’s biggest oil producing country spent N730.9 billion on subsiding price of fuel in 2018, an amount which was far higher than funds allocated to education, health, infrastructure and other key ministries and parastatals that would have increase the economic growth or standard of living of its 0ver 180 million people.
Over the years, the Nigerian government subsidizes things like electricity and petrol paying the difference between the cost to produce and the cost charged to customers in order to make them more affordable, but in the end is it worth the cost?
BusinessDay analysis of the latest financial records of Nigeria National Petroleum Corporation (NNPC) showed that in 2018, the government spent N730.9billion on subsidy popularly called “Under Recovery” alone which is far higher than total budget of Ministry of Education (N651 billion), Ministry of Health (N356 billion), Ministry of Transportation (N267 billion) and Ministry of Agriculture and Rural Development (N203 billion).
In 2018, the amount spent on subsidizing petrol was six times more than the total 2018 combined allocation of the country’s top 10 universities of N112.6 billion which include University of Ibadan N12.9billion;University of Lagos N11.6 billion; University of Nigeria N16 billion; Ahmadu Bello University N17.4 billion; Obafemi Awolowo University N17.4 billion; University of Benin N13.4 billion; University of Jos N11.7 billion; University of Calabar N14 billion; University of Ilorin of N8.8 billion; University of Abuja of N6.8 billion.
Also, subsidy payment is far more than the total allocations to National Health Insurance Scheme (NHIS) of N 999 million, the agency responsible for the health insurance of its over 190 million people. It’s also 28 times more than the total allocation of N25.4 billion allocated to National Primary Health care Development Agency (NPHCDA) in 2018, the agency responsible for primary health care development in Nigeria.
The subsidy money of N730.9 billion is seven times higher than the N102.9 billion capital allocation for the Federal Ministry of Education in the 2018 budget and eight times higher than the N86.485 billion allocated to the Federal Ministry of Health for capital expenditure.
2018 under recovery deduction is three times the N203 billion capital allocations for the Federal Ministry of Agriculture and rural development and four times N155 billion allocated to Federal Ministry of Water Resources in 2018 budget.
2018 under recovery of N730.9 billion was also higher than N715 billion total allocation of both capital and recurrent expenditure of Ministry of Power, Works and Housing, a very key and important ministry for any country interested in economic development.
Further analysis revealed the 2018 subsidy was higher than N576 billion allocated to Ministry of Interior and Ministry of Defense respectively.
Wumi Iledare, a professor of Petroleum Economics and Policy Research at the Centre for Petroleum Energy Economics and Law, University of Ibadan said payments of subsidy is a gorilla that will swallow our economy and as lead to the collapse of education institutions, road infrastructures and health facilities because we spend more than one quarter of the budget subsidizing petrol which benefit the elites more than the populist.
“Ghana our next door neighbour doesn’t control the price of petrol, so why do we,” Iledare asked.
Nigeria’s poor rely primarily on public transportation as such their per capita fuel consumption is significantly less than the country’s rich, who generally use private vehicles. Neighboring countries also benefit significantly from Nigeria’s fuel subsidy through smuggling.
The need to make NNPC curtail losses, improve transparency, attract investors, stimulate growth and increase government revenues have lead to agitation for reforms in the oil and gas sector stipulated in the Petroleum Industry Bill (PIB).
Africa largest oil producing oil country has been on a perpetual voyage with PIB which is one of its most important bills ever to be contemplated in Nigeria’s history in a journey that began sixteen years ago with a lot of anticipation and promises.
The bill is still stuttering through legislation after passing through four presidents, five presidential terms and five legislative tenures however the governance aspect of the bill which is Petroleum Industry Governance Bill (PIGB) is currently awaiting President Buhari (who is also the Minister of Petroleum) signature before it becomes a law.
