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Amid Rising Debt, Subsidy Cost Jumps By 370%

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The cost of fuel subsidy is estimated to increase by 369.93 per cent from 2021 to 2023, according to The PUNCH.

In 2021, the Nigerian National Petroleum Corporation said fuel subsidy gulped N1.43tn, although there was no record for under-recovery in January.

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The Minister of Finance, Budget and National Planning, Zainab Ahmed, had said on Thursday at the presentation of the 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper in Abuja that the Federal Government had projected to spend N6.72tn on petrol subsidy payments in 2023.

However, Ahmed said subsidy payment projection was based on two scenarios, with the first being spending an estimated N6.72tn for the entire year and the second, removing subsidy by June 2023 with the government spending N3.36tn rather than the full estimated N6.72tn.

READ ALSO: Debt Servicing May Take All Of Nigeria’s Revenue By 2026, IMF Warns

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She further noted that both scenarios had implications for net accretion to the federation account and projected deficit levels.

In January this year, the Federal Government decided to retain the controversial fuel subsidy for another 18 months following threats of protests by the Nigerian Labour Congress and other interest groups.

The International Monetary Fund recently said the fear of political resistance, widespread corruption and pressure from interested groups were hampering the removal of the fuel subsidy in Nigeria.

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In the first five months, Nigeria spent N1.27tn on petrol subsidy, with a plan to spend N4tn this year.

It was also disclosed that Nigerian National Petroleum Company Limited would continue to fund the N4.19tn fuel subsidies for the 2022 fiscal year on behalf of the federation despite being a commercial venture and its stance of no longer remitting any money to the Federation Accounts Allocation Committee for sharing to the three tiers of government monthly.

The increasing cost of fuel subsidy is projected to persist amid declining revenues and rising debts.

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According to a recent report, the FAAC allocation to the federal, state and local governments declined to 2.18tn between January and March 2022 when compared to the N2.24tn disbursed in the preceding quarter, Q4 2021.

The Debt Management Office recently disclosed that Nigeria’s total public debt stock increased to N41.60tn in the first quarter of 2022 from N39.56tn as of December 2021, showing an increase of N2.04tn within a period of three months.

During the presentation of the MTEF and FSP paper, the finance minister disclosed that the cost of servicing debt surpassed the Federal Government’s retained revenue by N310bn in the first four months of 2022..

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It was disclosed the Federal Government’s total revenue for the period was N1.63tn, while debt service gulped N1.94tn.

The IMF has also said that Nigeria will likely depend on overdrafts from the Central Bank of Nigeria to fund its proposed petrol subsidy bill.

READ ALSO: Nigeria’s Debt Set To Hit N45trn As Plan To Borrow Additional N6.39trn Emerges

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The finance minister has also said that Federal Government was planning to tap €2bn ($2.2bn) of the money it raised in a Eurobond sale last year and targets more local borrowing in 2022 to help fund fuel subsidy.

The World Bank recently warned that increasing fuel subsidy puts the Nigerian economy at a high risk as subsidy payments could significantly impact public finance and pose debt sustainability concerns.

 

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NNPCL Increases Fuel Price

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The Nigerian National Petroleum Company Limited, NNPCL, has increased the pump price of premium motor spirit across its retail outlets.

It was gathered that NNPCL retail outlets in Abuja have adjusted their fuel pump price to N955 per litre from N890.

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This is the case in NNPCL retail outlets along Kubwa Expressway, Wuse and other parts of Abuja.

READ ALSO:Fuel Station Manager, Three Others Arrested For Robbery

Similarly, the pump price hike has been implemented at filling stations in Kogi and Nasarawa.

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This means that the petrol pump price was increased by N65.

This comes after independent petroleum product marketers and filling station owners in Abuja increased petrol pump prices to between N950 and N971 per litre at the weekend. Their decision followed an upward review of the ex-depot petrol price by Dangote Refinery to N858 per litre, up from N820.

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Naira Appreciates Against Dollar As External Reserves Swell

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The naira appreciated against the dollar at the official foreign exchange market on Monday to begin the week on a bullish note amid swelling external reserves.

According to the Central Bank of Nigeria’s exchange data, the naira appreciated to N1,531.95 against the dollar on Monday from N1,533.74 traded last week Friday.

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READ ALSO:Naira Continues To Appreciate Against Dollar On Official Market

This showed that the Naira strengthened by N1.79 when compared to the N1,533.74 exchanged at the close of work last week.

Meanwhile, at the black market, the naira remained stable at N1560 per litre, the same exchange rate traded on Friday.

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The development comes as Nigeria’s external reserves had maintained a modest rise to $39.54 billion as of August 1st, 2025, up from $39.36 billion on July 30th.

 

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Naira Continues To Appreciate Against Dollar On Official Market

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The naira continued its appreciation against the dollar at the foreign exchange market on Tuesday.

Accordingly, the naira strengthened further to N1,533.18 against the dollar on Tuesday, from N1,534.21 traded the previous day.

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This represents a gain of N1.03 against the dollar on a day-to-day basis and marks the second consecutive day of appreciation at the official FX market.

READ ALSO:Woman Arrested For Killing, Selling Pregnant Nurse’s Body Parts

Meanwhile, on the black market, the naira depreciated further to N1,545 per dollar on Tuesday from N1,537 traded on Monday.

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Recall that the naira had similarly closed Monday’s trading session with mixed sentiments, recording gains at the official market but depreciating at the parallel market.

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