Wale Edun: Nigeria’s Petrol Subsidy Has Cost the Economy 5% of GDP

Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, has revealed that the petrol subsidy has cost the nation approximately 5 percent of its Gross Domestic Product (GDP).

During a panel discussion at the launch of the Nigeria Development Update in Abuja, Edun emphasised that the removal of the subsidy was imperative, noting its significant cost to the country. He commended the Tinubu administration for successfully resolving an issue that had persisted for 40 years.

He stated that the vexing issue of petroleum subsidy and the foreign exchange subsidy, which cost 5% of GDP, have been resolved for the first time in 40 years. He also mentioned that reforming the system requires additional time. Therefore, the event that commenced on May 29, 2023, was extracted from one location, attempted to re-emerge in another location, and was ultimately extinguished. 

“We have market pricing of PMS and with that, there’s huge benefit not only to NNPC, which was bearing the brunt, but to the economy as a whole, including the state governments and the local governments,” he added.

He noted that, similarly, the pricing of foreign exchange in the market poses significant challenges, alongside the various other measures implemented to alleviate the difficulties associated with macroeconomic reform. In this instance, discussions were held with the unions on Thursday.

Edun stated, “We explained the economic trajectory the country was on, and we explained the opportunity which we all needed to ensure that we do not miss.

“Continuing inflation, getting the economy growing again, repairing a trillion’s hole. I mean, you can work out the figure yourself.

“When you lose 5% of GDP, I think Dr. Ogeo said it all the other day. But if you imagine that we now have those funds back each month, each day, with market pricing of PMS, the government has money at the federal, state, and private levels, and local government levels, for housing, for infrastructure.

“It is a very, very significant point and it’s President Bola Tinubu that has been able to do what was there for 40 years.”

On 29 May, President Bola Tinubu announced the termination of the petrol subsidy regime. However, three months later, reports surfaced indicating that Tinubu was contemplating a “temporary subsidy” due to rising crude oil prices and fluctuating foreign exchange rates. 

Despite consistent denials from the federal government regarding the reinstatement of the petrol subsidy, the Nigerian National Petroleum Company (NNPC) Limited disclosed on 19 August that the government owes it ₦7.8 trillion for under-recoveries.

Furthermore, Edun indicated that the nation anticipates an investment of $1.2 billion. He revealed on Saturday that he had met with a significant investor involved in the production of finished goods from raw materials.

Edun stated, “He said he’s coming in with 1.2 billion dollars of investment. He wants access to the 9% funding.

“We have Jamie Dimon, the CEO of JPMorgan Chase. They don’t come any more elite than that. And he talked about looking at what we could do in Nigeria and the message he’s going back with is a very positive one.

Frances Ibiefo

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