Nigeria will likely spend 5.4 trillion naira ($3.7 billion) in 2024 – 50% more than in 2023 – to keep petrol prices fixed, while borrowing an extra 6.6 trillion naira to plug gaps in its budget, a draft document seen by Reuters showed on Thursday.
The “Accelerated Stabilisation and Advancement Plan” (ASAP), drafted by the finance ministry with private sector executives and some economists, aims to address challenges related to reforms aimed at boosting growth.
President Bola Tinubu last May axed a popular but costly subsidy on petrol in a landmark reform cheered by investors, to try to kick-start growth. But the move caused petrol prices to triple, increased transport cost and stoked inflation, angering motorists.
Tinubu has faced pressure from labour unions over the rising cost of living due to his reforms, but he has vowed not to roll them back.
Since July last year petrol prices have been fixed despite two currency devaluations. The country has relied on imports of petroleum products for years because state-owned refineries produce hardly any of them.
“At current rates, expenditure on fuel subsidy is projected to reach 5.4 trillion naira by the end of 2024. This compares unfavourably with 3.6 trillion naira in 2023 and 2.0 trillion naira in 2022,” the ministry said in the draft document.
Nigeria’s economy has been stuck in low gear with growth of around 3%, far short of the 6% annual expansion Tinubu targeted when he came to power last year.
Government denies report
The Nigerian government has reiterated that there will be no petrol subsidy payments in 2024, contrary to recent reports suggesting a budget allocation of N5.4 trillion for subsidies.
This clarification comes from Bayo Onanuga, Special Adviser to the President on Information and Strategy, amid the circulation of two fiscal policy documents that the government says are unofficial and still under review.
According to him, one document, titled “Inflation Reduction and Price Stability Order 2024,” has been mistakenly presented as an executive order signed by President Bola Ahmed Tinubu.
The other, a draft document named “Accelerated Stabilisation and Advancement Plan (ASAP),” is merely a proposal still under review.
The government insists these documents are part of an ongoing policy formulation process and urges the public and media to disregard them.
An executive summary of the stabilisation plan, obtained by correspondents, revealed for the first time that the government continues to subsidise premium motor spirit (PMS), or petrol. According to the plan, petrol subsidy expenditure is expected to reach N5.4 trillion by the end of 2024, up from N3.6 trillion in 2023 and N2.0 trillion in 2022.
