The Federal Government made a statement acknowledging that the subsidy on petrol between 2005 and 2021 could exceed N13 trillion ($74 billion) when considering the economic and opportunity costs of the policy in financial terms.
This was made known by Mr. Boss Mustapha, the Secretary to the Government of the Federation, during the launch of the Nigeria Extractive Industries Transparency Initiative (NEITI) strategic plan for 2022-2026 in Abuja.
Mustapha, represented by Mr. Maurice Mbaeri, the Permanent Secretary of General Services, highlighted that this cost is equivalent to Nigeria’s entire budget for health, education, agriculture, and defense over the past five years, as well as nearly a decade’s worth of capital expenditure between 2011 and 2020.
He further noted that the total cost could be even higher if other economic and opportunity costs to the nation were taken into account.
These costs include reduced allocations for sectors such as health, education, and technology infrastructure, the deterioration of the downstream sector due to the poor performance of Nigeria’s refineries, discouragement of private sector investment in the petroleum sector, low employment generation as a result of outsourcing the refining process, and inefficient supply arrangements leading to scarcity and long queues.
Mr. Mustapha explained that the government would continue to monitor the ongoing debate on this issue.
The Presidential Transition Council, which he currently heads, is developing a comprehensive position to guide the incoming administration in making an informed decision that serves the best interests of the public.
He praised NEITI for shedding light on the operations of the extractive industries and emphasized the government’s commitment to implementing the principles of the Extractive Industries Transparency Initiative (EITI) in managing Nigeria’s oil, gas, and solid mineral resources.
Dr. Orji Ogbonnaya Orji, the Executive Secretary of NEITI, called for the liberalization of the solid mineral sector to attract investment. He emphasized the sector’s potential to contribute more than 60 percent to the Gross Domestic Product (GDP), compared to its current 1.8 percent.
Dr. Orji highlighted NEITI’s reports, which revealed that the government had earned a total revenue of N624.1 billion from the solid mineral sector over a 13-year period, equivalent to about $1.4 billion at today’s exchange rate.
This amount pales in comparison to the substantial $394 billion earned in the oil and gas sector over just 10 years, indicating neglect of the significant potential in the solid minerals sector.
The newly launched 5-year strategic plan aims to strengthen governance reforms in the extractive sector through policy research, strategic stakeholder engagement, effective communication, and inter-agency collaboration, as stated by Dr. Orji.
Bar Olusegun Adekunle, the Chairman of the NEITI Board, expressed gratitude to President Muhammadu Buhari for providing NEITI with a new office complex that creates a conducive working environment for its staff.