Petrol subsidy cost Nigeria 5% of its GDP, says Wale Edun

Wale Edun, the minister of finance and coordinating minister of the economy, says petrol subsidy cost Nigeria about 5 percent of its gross domestic product (GDP).

On May 29, President Bola Tinubu said the petrol subsidy regime was over.

Three months later, TheCable reported that Tinubu was considering a “temporary subsidy” on petrol as crude oil prices and foreign exchange rates soared.

Although the federal government had consistently denied the return of petrol subsidy, the Nigerian National Petroleum Company (NNPC) Limited, on August 19, said the federal government owes it N7.8 trillion for under-recovery.

Speaking as a panelist at the launch of the Nigeria Development Update in Abuja, Edun said subsidy removal was necessary as it had cost the county a lot.

He said President Bola Tinubu’s administration has been able to end the subsidy issue — which had lingered for 40 years.

“For the first time in 40 years, the vexed issue of fuel subsidy and linked to it, the foreign exchange subsidy, costing 5 percent of GDP has gone, “ Edun said.

“It takes time to do reform. So what started on May 29, 2023, taken from one place, tried to re-exit in another place, and it was finally 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.

“In the same regard, market pricing of foreign exchange. And it’s a difficult step, apart from all the other things that you do to ameliorate the pain generally of macroeconomic reform. 

“In this case, we sat down with the unions yesterday. 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.”

‘INVESTMENTS ARE COMING IN’

Edun also hinted that the country is expecting $1.2 billion investment.

“On Saturday I sat down with a major investor who produces finished goods from raw materials,” he said.

“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.

“That’s big. It’s a big deal in terms of when major investors come and see and advocate that you get others coming.”

Edun added that the current administration is committed to keeping the economy stable, reining in inflation, and ensuring an increase in productivity and growth as well as reducing poverty.