FG spends $600 million monthly on fuel importation – Edun

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed that the country spends $600 million monthly on fuel importation.

He attributed the high import bill to the fact that neighboring countries, reaching as far as Central Africa, benefit from the country’s fuel imports. Edun made these remarks during an interview on AIT’s Moneyline program, which was posted on YouTube on Wednesday.

Edun explained that this situation was a key reason for President Bola Tinubu’s removal of the fuel subsidy, as the exact amount of fuel consumed domestically is unknown. According to the National Bureau of Statistics, the country’s petrol imports averaged one billion liters monthly after the fuel subsidy was removed on May 29, 2023.

He said, “President Tinubu removed the fuel subsidy on May 29, 2023. At that time, the poorest 40 percent of the population was only receiving four percent of the subsidy’s value, meaning they were hardly benefiting. Furthermore, no one knows the exact petroleum consumption in Nigeria. We know we spend $600 million to import fuel every month, but the issue is that neighboring countries are benefiting as well. We are effectively buying fuel not just for Nigeria, but for countries to the east, north, and west, extending almost to Central Africa. Nigerians need to decide how long we want to continue this.”

He emphasized that addressing this problem is crucial for the country’s economic growth. Edun also highlighted that the government’s priority is the welfare of the people, particularly the vulnerable, with a focus on ensuring food availability and affordability.

During the interview, Edun clarified that the N570 billion fund release to state governments was implemented in December of the previous year. He said, “This refers to a reimbursement received from December last year under the COVID financing protocol. The states have received more money, and Mr. President has charged them to ensure food production in the states.”

Edun also clarified that the recent decision to increase the maximum borrowing limit in the Ways and Means provision from five to 10 percent does not mean that the Federal Government intends to rely on Central Bank of Nigeria financing.

He stated that the government has instead utilized market instruments to manage its debts.

The minister said, “We have not approached the central bank to request loans to pay government debt or salaries. Instead, we have used market instruments to reduce our debts, which is crucial for maintaining a strong economy.

“The limit was raised to 10 percent, but this doesn’t mean it will be used. It serves as a fail-safe, providing extra flexibility for situations where there might be a temporary gap between revenue and expenses, allowing for brief drawdowns if necessary.”

He described the National Assembly’s approval as a precautionary measure.

The minister added, “This extra flexibility is there to address any timing discrepancies between incoming revenue and necessary expenses, allowing for brief drawdowns if needed.

“The aim is to adhere to the letter of the law, and that’s the main point.”

Edun also emphasized that the welfare of Nigerians remains a key priority for the current administration, particularly ensuring food availability and affordability.

He said, “There is a concerted effort to ensure homegrown food availability. In the short term, aside from distributing reserves, there is a window for importation to reduce prices and ensure immediate food availability as per the President’s commitment.”

He assured that this measure would not undermine local farmers, as importation would only be allowed after exhausting local supplies.

He said, “One of the conditions for importation is that all available local supplies must be utilized first. Auditors will verify this.”

Edun concluded that these interventions aim to reduce inflation, stabilize exchange rates, and lower interest rates, creating a conducive environment for investment and job creation.