The Nigerian government has reported spending N10,413 trillion on fuel subsidies over the last 13 years ( 2006-2019). The Minister of Information and Culture, Lai Mohammed, announced this at a media briefing in Abuja on Monday in an effort to justify w...
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The Nigerian government has reported spending N10,413 trillion on fuel subsidies over the last 13 years ( 2006-2019).
The Minister of Information and Culture, Lai Mohammed, announced this at a media briefing in Abuja on Monday in an effort to justify why last week the government announced an end to the payment of fuel subsidies.
The Minister, who said that the move had become necessary due to the falling demand for oil, which remains Nigeria's main source of income, called on Nigerians to recognize and support the decision.
"The cost of fuel subsidies is too high and unsustainable. From 2006 to 2019, the fuel subsidy amounted to N10,413trillion. That's an average of N743.8 billion a year.
“Government can no longer afford to subsidize petrol prices, because of its many negative consequences. These include a return to the costly subsidy regime. With 60 per cent less revenues today, we cannot afford the cost.
“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration. The days in which Nigerians queue for hours and days just to buy petrol, often at very high prices, are gone for good. Of course, there is also no provision for fuel subsidy in the revised 2020 budget, because we just cannot afford it,” he said
Speaking about the rise in electricity tariffs, Mohammed explained that the government had spent about N1.7 trillion to supplement tariff shortfalls.
The Minister did not indicate the period during which the amount was spent by the government. He only said, "The truth of the matter is that, because of the problems with the largely private electricity industry , the government has supported the industry. To keep the industry going, the government has spent almost N1.7 trillion so far, in particular by supplementing tariff shortfalls.
“The government does not have the resources to continue along this path. To borrow just to subsidize generation and distribution, which are both privatised, will be grossly irresponsible.”
In order to protect the vast majority of Nigerians who can not afford to pay cost-reflective tariffs from increases, the government said, "The industry regulator, NERC, has agreed that tariff adjustments should be made, but only on the basis of guaranteed service improvement."
He added, "Under this new arrangement, only customers with a guaranteed minimum of 12 hours of electricity may have their tariffs adjusted. Those who have less than 12 hours of supply will not experience any increase. This is the largest customer group.