Presidency: Fuel Subsidy Removal Has Tripled Allocation to States

Since the government removed fuel subsidies, revenue sharing between the federal, state, and local governments has dramatically increased. This revenue jumped from 760 billion Naira in 2023 to a substantial 3.2 trillion Naira in 2024.

The Special Adviser to President Bola Tinubu for Media and Public Affairs, Mr. Sunday Dare stated that the removal of fuel subsidies has significantly increased revenue sharing among the federal, state, and local governments. He emphasized that the previous subsidy system resulted in a substantial annual “loss” of $7.5 billion for Nigeria, a situation deemed unsustainable. He urged citizens to hold state governors accountable for the effective use of the increased revenue, highlighting that these funds are crucial for human capital development.

Mr Dare employed the usage of a metaphor to emphasize the long-term consequences of delaying the removal of fuel subsidies. He likened the situation to needing a timely stitch to prevent further damage, stating that the country was “hemorrhaging” due to the financial burden of the subsidies. He also pointed out that successive governments had avoided removing the subsidies for over three decades, despite their recognized inefficiency and corruption.

The Special Adviser emphasized the widespread corruption within the fuel subsidy system, highlighting that 87 Nigerian companies and individuals were implicated in subsidy scams, resulting in billions of dollars in losses for the country.

The Special Adviser explained that when the President assumed office mid-year 2023, two decisive actions were necessary. Firstly, the long-standing avoidance of fuel subsidy removal had to be addressed. This policy had been in place for 30 years, resulting in a significant annual loss of $7.5 billion for the country. Secondly, the issue of widespread corruption within the subsidy system needed to be tackled. This was highlighted by the fact that 87 Nigerian companies and individuals were identified as wanted suspects in corruption-related subsidy scams.

The Special Adviser emphasized that the elimination of fuel subsidies has dramatically increased the funds distributed by the Federation Account Allocation Committee (FAAC). In 2023, the monthly allocation totaled N760 billion, but in 2024, this figure has skyrocketed to N3.2 trillion.

“The resources that have been freed up for human capital development, and one part that is really poignant is the fact, in 2023, N760 billion, that was the FAAC that was shared by the 36 states and the federal government.

“As of 2024, that moved up to N3.2 trillion. Now, when it comes to governance, there’s the federal government, there’s the sub-national. Every month, these monies are shared. It has tripled to the state government. So, subsidy has freed up resources. If subsidy was not removed, we would not have it go up to 3.2 trillion,” he maintained.