EDITORIAL: Fuel Subsidies and the Missing Figures in Nigeria’s Federation Accounts

Nigeria’s fuel-subsidy debate has returned to the center of public discussion, driven in part by Atiku Abubakar’s pledge to restore the subsidy if elected in next year’s general election. But the finance ministry’s attempt to explain what happened to subsidy savings has raised as many questions as it answers.

Premium Times welcomes the effort to bring greater transparency to public finances. Its editorial argues, however, that the ministry’s accounting fails to balance several ledgers, beginning with the way fuel subsidies were recorded. Until the subsidy was removed, payments were managed through the books of the national oil company, NNPC Limited, rather than through a budget line in government accounts.

The federal government and the states had agreed that subsidy payments would be treated as a first-line charge on the federation account. A clearer system, the editorial says, would have required the federal and subnational governments to approve a sharing formula for the subsidy from federation-account receipts. Instead, the chosen arrangement placed certain first-line charges beyond the revenues shared from that account, leaving no straightforward budget entry for the subsidy.

The editorial credits the finance minister with clarifying the effect of foreign-exchange reforms on nominal government revenues, before accounting for inflation and the naira’s depreciation. But it says the central question remains whether subsidy removal, which ultimately took place in 2024, increased the funds NNPCL transferred into the federation account.

Answering that question requires a closer examination of oil-company transfers, Premium Times argues. Those receipts would not have come solely from subsidy removal, so the review should establish which funds paid the subsidies, how much was involved in the final year of payments and whether the government owed NNPCL any arrears. The editorial ends by pointing to other recent policy measures, including an executive order signed by the president earlier this year.

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Did the removal of the subsidy, which eventually happened in 2024, increase the monies coming from the NNPCL into the federation account?