Nigeria’s top 10 richest states gulp nearly half of petrol subsidy

Nigeria’s top 10 richest states gulp nearly half of petrol subsidy

By Peter Imouokhome 

Nigeria’s top 10 richest states have accounted for nearly half of petrol subsidy in the country, which alludes to the fact that the poorest states have not benefited from the payment of petroleum subsidy in the country.

A BusinessDay Fact Check on the assertion of the Governor of Edo State that one-third of states in Nigeria consume two-thirds of subsidies has found it to be accurate.

According to the latest official data sourced from the Nigerian Bureau of Statistics (NBS) Q3 ‘2019, Lagos, Kano and Ogun led the chart of petrol consumption across the top 12 states (one-third of total states in Nigeria) including the FCT with approximately 739 million, 459 million, and 278 million liters of petrol consumed within three months, respectively. This represented 15 percent (Lagos), 9 percent (Kano), and 6 percent (Ogun) of total consumption across all states. Niger, Oyo, Delta, Rivers, FCT, Zamfara, Kaduna, Enugu, and Adamawa states made up the list in that order.

A report submitted to the Federal Account Allocation Committee (FAAC) by the Nigerian National Petroleum Corporation (NNPC) also notes that between January and December 2021, N1.15 billion was spent by the country on petroleum subsidy. A similar amount – N752 billion was spent by the country in 2019 with an estimated monthly average of N150billion spent, according to NNPC’s 2019 report.

In 2019, the top 10 richest states in the country are Lagos, Delta, Osun, Ogun, Oyo, Edo, Ondo, Anambra, Kwara, and Bayelsa states. These altogether got a total amount of N502 billion in petrol subsidy, representing nearly half of total petrol subsidy in the year.

Also, between the months of July and September 2019, the top three states with the highest fuel consumption – Lagos, Kano, and Ogun got fuel subsidy amount to the tune of N113 billion, N70 billion, and N42 billion, respectively, even when they were not among the top 10 poorest states in the country.

Specifically, Lagos ranked last on the list of poor states, Kano ranked 23rd and Ogun ranked 4th. Subsidizing the fuel consumption of Nigeria’s richest states to billions of naira negates the poverty eradication goal and the basis for subsidy existence over the years, which was to reduce the pain on the poorest people in the country.

The poorest states have in fact not benefited from the subsidy expenditure of the Federal Government like the richer states have. Thus a mismatch exists in petrol subsidy payments in the country.

At the last Osinbajo-chaired Federal Executive Council (FEC) meeting which held, Governor of Edo State Godwin Obaseki had disclosed that the FEC was considering the recommendations of the Ad-hoc Committee on fuel subsidy removal, which had endorsed total deregulation of Premium Motor Spirit (PMS) in Nigeria beginning from February 2022.

According to Obaseki, the committee acted on data findings available to it which showed that there was an absence of equity in the operations of the subsidy payments necessitating its removal to enable free up revenue that could be better channeled on infrastructural development at the states and the federal level.

One of such key data referenced by the governor was that one-third of states in Nigeria consume two-thirds of subsidies.

“As you all know and aware, the issue of subsidy has been one matter that NEC has deliberated on, for more than a year now. There was an ad-hoc committee, which was set up by NEC headed by Governor El-Rufai that included members of the executive arm of government that worked on recommendations as to what we should do about the costs of petrol locally because as you realize, and as has been told us, the cost of petrol in Nigeria today is about N162 per litre.

“Whereas every other country surrounding Nigeria is selling the same product at more than 100 percent of the cost in Nigeria.

“As for NEC, the arguments remain. Should we continue this regime of spending money we do not have to subsidize the living standards of only mostly those who have vehicles? And when NEC looked at some of the analyses last year, we then realized that less than one-third of the states of this country consume two-thirds of the subsidy.

“The issue of equity also came up. All of these findings were presented to NEC, and NEC has had several deliberations. And the deliberations are still ongoing. So, no, NEC has not come up with any decision yet. I think recommendations have also been made to the President. That is what I am aware has transpired so far.” Obaseki had explained to the Press coming out of the FEC meeting.

Also, Nigeria’s Minister of Finance – Aisha Ahmed had lamented at a public forum in 2021 that the continued payment of petrol subsidy favoured the rich more than the poor.

“This (subsidy) is costing us big time. We are spending over N150 billion on subsidy, which means NNPC has to use that amount of money to pay for PMS and distribute it. That is money that the federation account can share,” she said.

“This is money that could have been available for education, health, and infrastructure, reduce our borrowing, and increase the amounts that states and local governments are collecting.

“We are being penny-wise, pound-foolish to think that by giving this subsidy, that citizens are benefitting. But by the end of the day, the citizens are actually the ones that are carrying the brunt of the wealthy.

“Some (the rich) have two, three, four cars and they are the ones that we are subsidizing. It is not helping the farmer who needs a bus from his farm to the market. But we need to get rid of subsidy completely, although it is not a popular view with labour.”

According to her, “Right now, we are subsidizing consumption in Nigeria; we sell at N165 per litre when our neighbours are selling at N500 per litre. It is only the marketers that are benefiting by taking this product from Nigeria and selling it across borders. The common man is not benefiting.

“The transition is not an easy one if we have to remove the subsidy. What are the alternatives? What can we provide for citizens? So, we are projecting we’ll be paying at least N900 billion subsidy for next year,” the minister of finance lamented at a public forum in 2021.

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