RipplesMetrics… Fuel scarcity: How Nigerian govt subsidised cost of fuel in the two decades

Just within the first week of July, long queues at petrol stations across some states, including Lagos and the Federal Capital Territory, Abuja, resurfaced due to ‘fuel scarcity’. Several media outlets reported how motorists and citizens struggled to purchase petrol at inflated prices.
At the beginning of this development, the reason for the scarcity was unknown. Later, the Nigerian National Petroleum Company Limited (NNPC Ltd) said that logistics challenges and flooding caused the fuel queues.
The Minister of State, Petroleum Resources, Heineken Lokpobiri, further mentioned that the federal government was doing all within its capacity to control the challenge; as petrol marketers attributed the scarcity within the country to supply challenges faced by NNPC which imports nearly all the petrol that comes into Nigeria.
While the scarcity of fuel has always been a recurring challenge to Nigeria, the backbone of this problem is the country’s inability to refine its crude oil. Over time crude oil is being exported to other countries to be refined and sold back as either petrol, diesel or kerosene.
This action forces the Nigerian government to always subsidise the cost of importation, which is reflected at pump stations. In a report, Ripples Metrics examined how the cost of fuel has reason since 1999 over time.
Another report showed that between December 2018 and December 2023, the average retail cost paid by consumers for Premium Motor Spirit (Petrol) rose by 360.81 per cent.
Meanwhile, up until the assumption of President Bola Tinubu as president of Nigeria, fuel subsidy was removed, but there are concerns that the government is silently subsidising the cost of importation.
This report looks into the amount spent by the federal government on fuel subsidies.
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According to data from SBMintel, in the last 40 years, the federal government has adjusted the pump price of petrol 32 times. However, despite this, it has failed to eliminate subsidies.
Between 2008 and 2024, the data from the Nigeria Extractive Industries Transparency Initiative showed that the Nigerian government spent a total of N30.27 trillion to subsidise fuel. This payment was approved under different administrations.
Breaking the data down by the administration, under the late former president, Musa Yaradua, N1.78 trillion was spent on fuel subsidies between 2008 and 2010. Between 2011 and 2014, under former president Goodluck Jonathan, a total of N6.01 trillion was spent.
Under former president Muhammadu Buhari, who was president for eight years, Nigeria spent a total of N7.04 trillion between 2015 and 2022. While between 2023 and May 31st 2024, N16.04 trillion have been spent on subsidies.
A closer look at the data showed that 2017 was the only year Nigeria spent the lowest on fuel subsidies. This would mean that an average of N12.8 billion was spent every month in 2017, unlike other years.
From the compiled data, N631 billion was spent in 2008, N469 billion in 2009, N667 billion in 2010, N2.11 trillion in 2011, N1.36 trillion in 2012, N1.33 trillion in 2013, N1.22 trillion in 2014, N654 billion in 2015, N240 billion in 2016, N154 billion in 2017 and N1.19 trillion in 2018.
In 2019, N508 billion was spent, in 2020, N864 billion, N1.43 trillion in 2021, N2 trillion in 2022, N3.60 trillion in 2023 and in 2024, based on projections, a total of N5.4 trillion has been spent.
The data also showed that the amount spent on petrol subsidies increased consecutively from 2019 till date.
By: James Odunayo
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