The Minister of Finance and Coordinating Minister for Economic Affairs, Wale Edun, revealed that the country is currently spending $600 million per month on fuel imports.
He explained that the high import cost is because neighboring countries in Central Africa benefit from the country’s fuel imports. The minister stated this in an interview
on Wednesday.
Edun explained that this situation is the reason why President Bola Tinubu removed the fuel subsidy as he does not know the exact volume of fuel consumed in the country.
According to a report by the National Bureau of Statistics, the country’s petrol imports have fallen to an average of 1 billion litres per month since President Bola Tinubu removed the fuel subsidy on May 29 last year. He said: “The fuel subsidy was removed May 29, 2023, by Mr. President, and at that time, the poorest of 40 percent was only getting four percent of the value, and basically, they were not benefitting at all. So it was going to be just a few.
“Another point that I think is important is that nobody knows the consumption in Nigeria of petroleum. We know we spend $600m to import fuel every month but the issue here is that all the neighboring countries are benefitting.
“So we are buying not for just for Nigeria, we are buying for countries to the east, almost as far as Central Africa. We are buying. We are buying for countries to the North and we are buying for countries to the West. And so we have to ask ourselves as Nigerians, how long do we want to do that for and that is the key issue regarding the issue of petroleum pricing.”
He added that the country needs to take decisive steps to address the issue as it is hindering economic growth.
Of great importance to the government is the welfare of the people, especially the vulnerable, Edun said.
One of the key focus areas is ensuring food availability and affordability. Continuing the interview, the Finance Minister revealed that the release of the 570 billion naira fund to state governments was made in December last year.
He said, “This actually refers to a reimbursement that they received from December last year onwards and it was a reimbursement I think under the COVID financing protocol but the point is that the states have received more money. They have received more money. Mr President has charged to ensure food production in the states.”
Edun also clarified that the recent decision to increase the maximum borrowing percentage in the budget from 5% to 10% does not mean that the Federal Government is inclined to rely on funds from the Central Bank of Nigeria.
He said the government is likely to utilize market tools in debt management. The minister said, “We have not gone to the central bank to say, please lend the government money to pay its debt, to pay its salaries. That’s Ways and Means. We have not gone. In fact, we have used market instruments to pay down what we owed, and that is a very, very germane aspect of having a strong economy.
“It was raised to 10 percent, but that doesn’t mean it will be used. It’s there as a fail-safe and just gives that extra flexibility so that if a payment needs to be made and there is a mistiming or gap in when revenue would come in and expenses, we can just draw it down briefly.”
He explained that the approval by the National Assembly is a fail-safe.
The Minister added, “Sometimes it just gives that extra flexibility so that if a payment needs to be made and there’s a mistiming, there’s a gap between the time at which the revenue will come in and the expenses needed, you can just draw down briefly.
“So, the aim is to keep within the letter of the law, I think that’s the main point.”
He also said that the welfare of Nigerians remains a key priority for the current administration, especially in ensuring the availability and affordability of food.
Edun said, “There is a concerted effort to ensure that we have homegrown food available. In the short term, apart from what is being distributed from reserves, there is a window that has been opened for importation because the commitment of Mr President is to drive down those prices now and make food available now.”
He assured everyone that the approach would not be a disadvantage to local farmers as importation would only be allowed if local supplies were depleted. “So, one of the conditions for this importation will be that everything available locally in the markets or with the millers and so forth has been taken up. We will have auditors that will check that” he said.
He also stressed that these interventions are aimed at controlling inflation, stabilizing the exchange rate, and lowering interest rates, thereby creating a favorable environment for investment and job creation.
