Nigeria Spent 10 Trln Naira on Fuel Subsidy in 13 Years ~BudgIT

The controversy over petroleum subsidy by the government resurface again this week as Nigeria’s leading digital advocacy group BudgIT claimed the country has expended about 10 trillion naira on fuel subsidy between 2006 and 2018.
In a statement, the digital on good governance is seeking an end to the practice, saying “Nigeria is dancing on the edge of a razor blade by continuing its subsidy regime.”
It said that the 10 trillion consumed by the subsidy regime is sufficient to construct 27,000MW of electricity or build about 2,400 units of 1000-bed standard hospitals across 774 local government areas of Nigeria, found our research.
The group said its high time fuel subsidy is removed, noting that efficient palliative measures should be provided for those that will be worse hit by the removal.
According to BudgIT, four sectors - Transportation, Power, Health and Education - should be prioritized to cushion the effects.
They call on the government to target the funding of cheaper mass transit and subsidies to public institutions as a viable method to ease the impact of subsidy removal on the people.
The group said its recent research showed that Nigeria currently imports an average of 91percent of its daily petrol needs, thus disproportionately exposing local petrol prices to price shocks from international factors of production and exchange rate volatility.
“There is a near perfectly inverse relationship between the fall in the value of Naira and the rise in the cost of imported petrol. That is, when next the Naira is devalued, Nigeria’s subsidy bill can be expected to jump.
According to the group, the continuation of petrol price regulation perpetuates safety nests for exceptional forms of corruption within the country's subsidy regime.
It noted that import subsidy creates petrol price arbitrage - the differential between the regulated price in Nigeria and the high petrol prices in neighbouring countries - which is big enough to incentivize smuggling of subsidized products to neighbouring border towns.
“According to NNPC, there are 2,201 petrol stations in Nigeria’s porous border towns and coastal frontiers, with a combined fuel tank capacity of 144.9 million liters’” BudgIT said
Analysts argue, ringing corruption alert that the population around that area is far from justifying the size of the petrol market.
BudgIT noted with dismay that “fuel subsidy” deprives Nigeria of funds needed for critical socio-economic development as it discourages investors, who generally prefer a deregulated industry, from investing in the downstream sector especially in the area of refinery construction and operation.