Successive governments have labelled petroleum subsidy as the main challenge the government faces when it comes to revenue generation.
The aftermath of the fuel subsidy removal has added more revenue to the Federation Account Allocation Committee (FAAC) with the fund rising from ₦650 billion to ₦1 trillion monthly within a four-month period.
This was made known by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, at Asaba, the Delta State capital, during the opening of a four-day retreat organised for FAAC members.
According to the minister who was represented by the Permanent Secretary, Finance, Special Duties, Okokon Udo, the subsidy regime had eaten up revenue which the government would have used to carry out sustainable projects that were critical to the well-being of the populace.
The minister also stated that the current administration would continue to implement people-oriented policies as it was mindful of the needs and welfare of Nigerians.
Recall prior to the removal of subsidy by President Bola Ahmed Tinubu in his inauguration speech on May 29, 2023, the Nigerian National Petroleum Company Limited (NNPCL) had revealed it spent ₦4.39 trillion ($9.7 billion) on a petrol subsidy in 2022.
When broken down monthly, the country’s petroleum body further revealed about ₦400 billion was spent monthly on petroleum subsidies.
The effect of subsidy removal was immediately reflected in the May 2023 sharing formula as the Federation Account Allocation Committee (FAAC) shared a total sum of ₦786.2 billion in revenue to the Federal Government, States and Local Government Councils.
When compared with the amount shared in the previous month – April 2023 (₦655.9 billion), the amount indicated a 20% increase.
Successive governments have labelled petroleum subsidy as the main challenge the government faces when it comes to revenue generation as most of the state’s funds are spent on subsidy payments.