Nigeria Spent N1.16 Trillion on Fuel Subsidy in 2021, RMAFC Tells Senate

Nigeria incurred a staggering N1.16 trillion in fuel subsidy costs during 2021, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) revealed. This figure represents a significant portion of the nation's oil revenue, alongside another N1.20 trillion deducted from federation crude oil sales proceeds in the same year. The revelations came as the Senate Public Accounts Committee (SPAC) intensified its probe into the management of revenues within Nigeria's oil and gas sector, examining audit reports from the Nigeria Extractive Industries Transparency Initiative (NEITI) for 2021 to 2023. Dr. Mohammed Bello Shehu, Chairman of RMAFC, presented the findings to the committee, highlighting that fuel subsidy deductions were among the largest, substantially reducing distributable earnings to the Federation Account. Other deductions included N16.20 billion for crude and product losses, N22.05 billion for pipeline repairs, and N6.75 billion for strategic stock holding. Furthermore, RMAFC Chairman Shehu questioned the methodology used to calculate the constitutionally mandated 13% derivation fund for oil-producing states. He argued that deducting various costs before computing the derivation allocation undermines the principle's intent, significantly reducing revenues for these states. The committee deferred its consideration of submissions from the Niger Delta Development Commission (NDDC) to allow members more time to review the documents. The hearing also saw the committee express displeasure over the absence of the Auditor-General of the Federation.

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Fuel subsidy alone accounted for N1.16 trillion in 2021, while N1.20 trillion was deducted from federation crude sales proceeds.