Fresh questions have emerged over Nigeria’s fuel subsidy policy following claims that part of the Nigerian National Petroleum Company Limited’s (NNPCL) N17.5 trillion receivables from the Federation may represent an indirect form of subsidy despite the Federal Government’s declaration that fuel subsidy ended in May 2023.
The renewed Fuel subsidy debate follows comments by Chairman of the Alliance for Economic Research and Ethics Ltd/GTE and former National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. Dele Oye.
According to Oye, the N17.512 trillion recorded in NNPCL’s audited financial statements should not automatically be interpreted as fuel subsidy.
He explained that the amount comprises N8.672 trillion classified as energy security costs and N8.840 trillion recorded as other receivables from the Federation, including advances and government-related expenditures. Oye also clarified that the frequently cited N7.131 trillion represents energy security costs incurred during 2024 and already forms part of the N8.672 trillion balance, warning that adding both figures together would amount to double counting.
While rejecting the suggestion that the entire receivable constitutes subsidy, Oye argued that a significant portion has the characteristics of what economists describe as an implicit subsidy. He pointed to NNPCL’s audited 2024 financial statements, which attributed energy security costs largely to foreign exchange differences between the exchange rate used to determine imported petrol prices and the rate applicable when payments were eventually settled.
According to him, consumers did not bear the immediate full cost of imported Premium Motor Spirit (PMS), while the resulting financial burden was transferred to the Federation through NNPCL’s receivable structure and remittance arrangements.
He noted that the World Bank similarly described the arrangement as an implicit PMS subsidy, stating that it effectively ended in October 2024 after NNPCL adopted the official exchange rate for fiscal revenues and discontinued recording foreign exchange differential losses.
Oye also questioned whether the continued recovery of energy security costs aligns with the Petroleum Industry Act (PIA). While acknowledging that Section 64(m) empowers NNPCL to act as supplier of last resort for energy security purposes, he argued that Section 317(6) provided only a six-month transitional period for government-directed fuel supply arrangements.
He further referenced Sections 80, 81 and 162 of the Nigerian Constitution, saying a full legal assessment would require examination of government approvals, executive directives, appropriation records and reconciliation documents.
According to Oye, deductions made before NNPCL remits petroleum revenues reduce the funds available for distribution through the Federation Accounts Allocation Committee (FAAC), affecting federal, state and local government finances. He also questioned why substantial energy security costs continue despite the commencement of operations at the Dangote Petroleum Refinery, suggesting that inadequate domestic crude supply has prolonged dependence on imported petroleum products.
To strengthen public confidence, Oye called for an independent forensic audit of all energy security costs and Federation receivables, alongside monthly disclosure of petroleum revenues, deductions, remittances and FAAC distributions. He further urged the government to ensure that any future fuel price support measures receive explicit legislative approval rather than being financed through off-budget arrangements, saying such reforms would improve accountability and transparency in Nigeria’s petroleum revenue management.
