The Federal Government said on Thursday that the amount spent on subsidizing Premium Motor Spirit, also known as petrol, between 2005 and 2021 was N13 trillion, and that the country lost N16.3 trillion to oil theft between 2009 and 2020.
It made the announcement in Abuja through the Nigeria Extractive Industries Transparency Initiative (NEITI) at a policy dialogue on oil swaps co-hosted by NEITI and Policy Alert, an indigenous civil society organization, with support from the Opening Extractives.
In a presentation, NEITI’s Executive Secretary, Orji Ogbonnaya-Orji, stated that there was an urgent need to make a decision on the agitation for the removal of fuel subsidies.
He emphasized that full deregulation of the petroleum sector would permanently put an end to the debate over oil swaps, citing NEITI findings that revealed the government’s massive expenditure on fuel subsidies.
“NEITI’s latest policy brief titled, ‘The cost of fuel subsidy: A case for policy review,’ revealed that Nigeria expended over N13tn ($74bn) on fuel subsidies between 2005 and 2021.
“The figure in relative terms is equivalent to Nigeria’s entire budget for health, education, agriculture, and defence in the last five years, and almost the capital expenditure for 10 years between 2011 2020. It is also important to note other economic opportunity costs of fuel subsidy which include slashing allocations for the health, education, and technology infrastructure sectors.
“Others include the deterioration of the downstream sector with the declining performance of Nigeria’s refineries and recording zero production in 2020; disincentivised private sector investment in the down and mid-stream petroleum sector; low employment generation since the refining process is done outside the shores of Nigeria; worsening national debt; declining balance of payment, forex pressures and depreciation of the naira and of course product losses, inefficient supply arrangements, scarcity and its attendant queues, etc,” Orji stated.
On crude oil theft, he said NEITI policy brief and data pulled from industry reports of the oil and gas sector “showed that between 2009 and 2020 (12-year period), Nigeria lost 619.7 million barrels of crude oil valued at $46.16bn or N16.25tn.”
Orji explained that the volume of crude oil losses represented a loss of more than 140,000 barrels per day, adding that between 2009 and 2018, Nigeria also lost 4.2 billion litres of petroleum products from refineries valued at $1.84bn.
“These findings and recommendations on tackling crude oil theft have been submitted to the President through the Presidential Committee on Crude Oil Theft, in which NEITI also served as a member.
“The committee has concluded its work and submitted its report to the President. The committee did an excellent job with far reaching recommendations. I will like to commend the Office of the NSA (National Security Adviser) that coordinated that panel’s work,” the NEITI boss stated.