N15.8tn Fuel Subsidy Savings: Tinubu govt explains how the money was spent

The Federal Government has disclosed how the N15.8 trillion saved from the removal of petrol subsidy was distributed among the three tiers of government over the past three years.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the disclosure at a press conference on Wednesday, outlining the financial impact of the Bola Tinubu administration’s economic reforms.

According to Oyedele, the subsidy removal savings accrued to the Federation Account and were subsequently shared among the Federal Government, state governments and local governments.

He said the Federal Government received N5.43 trillion, states received N6.52 trillion, while local governments received N3.88 trillion.

The minister explained that, beyond the subsidy savings, the reforms generated an additional N3.12 trillion in incremental revenue, while the government also recorded N11.85 trillion in incremental borrowing.

This, he said, brought the Federal Government’s total incremental resources during the period to approximately N20.4 trillion.

However, Oyedele stressed that the subsidy removal did not result in a huge pool of surplus cash available to the Federal Government, noting that the administration also incurred substantial additional expenditures during the same period.

“Subsidy removal therefore did not create one large pool of cash available to the Federal Government. It reduced a major fiscal burden and the amount of additional borrowing that would otherwise have been required,” he said.

According to him, the government’s additional expenditure during the period amounted to approximately N30.64 trillion.

He said N9.39 trillion was spent on wage adjustments, while N9.37 trillion went towards external debt servicing.

The government also spent N6.47 trillion on infrastructure and N3.14 trillion on electricity subsidies, according to the minister.

Oyedele’s disclosure comes more than three years after President Tinubu announced the removal of the petrol subsidy shortly after assuming office in May 2023.

The government subsequently introduced other major economic reforms, including the liberalisation of the foreign exchange market.

The reforms triggered significant increases in petrol prices and contributed to substantial fluctuations in the value of the naira, while the administration has continued to argue that they were necessary to reduce fiscal pressures and place the economy on a more sustainable footing.

The latest figures provide a breakdown of the financial resources generated or made available following the reforms, while also highlighting the scale of additional expenditure incurred by the Federal Government during the same period.

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