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🇳🇬 Nigeria /Economy & Trade

Restoring petrol subsidy could cripple 15 northern states within three months, professor warns

From The Punch · () English

Translated from English and summarized by DistantNews. Read the original for the full story.

At a glance

Interview Named sources Context piece
  • Obafemi Awolowo University professor Tunji Ogunyemi says restoring the petrol subsidy would reduce revenue shared through Nigeria’s Federation Account.
  • He warns that more than 15 northern states could collapse within three months and struggle to pay workers and pensioners.
  • Ogunyemi also says lower revenue would restrict federal spending and could weaken Nigeria’s ability to service its debts.

Restoring Nigeria’s petrol subsidy could leave more than 15 northern states unable to sustain their operations within three months, Professor Tunji Ogunyemi has warned.

I think it is calamitous, to say the least, if we reverse the subsidy regime in Nigeria in favour of returning the subsidies.

· Tunji OgunyemiHe opposed restoring the petrol subsidy during an interview about Atiku Abubakar’s 2027 proposal.

Ogunyemi, an Obafemi Awolowo University professor, made the claim during an interview on the Open Forum 360 podcast. He was responding to a proposal by African Democratic Congress presidential candidate Atiku Abubakar to restore the subsidy if elected in 2027.

He argued that the policy would reduce the funds available for distribution through the Federation Account, on which most states depend to finance government operations. “I think it is calamitous, to say the least, if we reverse the subsidy regime in Nigeria in favour of returning the subsidies,” he said.

The Federation Account is the jugular of more than 30 states in the federation. Only about four states in Nigeria can survive without the Federation Account.

· Tunji OgunyemiHe explained why he believes lower shared revenue would threaten state finances.

Ogunyemi described the Federation Account as “the jugular of more than 30 states in the federation” and said only about four states could survive without it. He identified Lagos, Delta and Rivers as states better able to cope without heavy reliance on federal allocations, while citing Taraba as highly dependent on the account.

So if you now say reduce the accrual from the account, I tell you more than about 15 states in the north will collapse. They will collapse within three months.

· Tunji OgunyemiHe forecast the effect of reduced Federation Account revenue on northern states.

He warned that a revenue squeeze would return states to a situation in which they could not pay salaries, let alone pensions. It could also make it difficult for the federal government to finance recurrent and capital spending, and affect debt servicing and Nigeria’s creditworthiness. Ogunyemi questioned whether Abubakar’s proposal was intended to win political support, but the supplied report ends before completing that part of his statement.

The second is that states will return to a regime of incapacity to pay salaries, let alone pensions.

· Tunji OgunyemiHe described the expected impact on state governments’ obligations to workers and pensioners.
About this summary

Originally published by The Punch in English. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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