The Federal Government’s debt to the Nigerian National Petroleum Company Limited (NNPCL) for fuel subsidies has risen to N7.74 trillion as of September 2024, according to a presentation made to the Federation Account Allocation Committee (FAAC) in February. This debt arises from the government’s support for maintaining a stable retail price for Premium Motor Spirit (PMS) despite the higher costs incurred by the NNPCL between June 2023 and September 2024.
The subsidy debt represents the exchange rate differential for importing petrol at higher rates. The government had been covering the cost difference between the projected and actual prices for PMS imports, shielding consumers from price hikes. This amount now needs to be paid back to the NNPCL, and the government is working on measures to settle the debt within 210 days.
The fuel subsidy issue stems from exchange rate fluctuations affecting the cost of fuel imports. In a detailed breakdown, it was noted that the total amount of exchange rate differential for PMS imports was N10.499 trillion, of which N2.756 trillion was recovered between November 2023 and September 2024, leaving the government with an outstanding balance of N7.74 trillion.
The document also outlined a month-by-month increase in the debt, with the total sum rising from N1.29 trillion in June 2023 to N7.74 trillion by September 2024. This represents a significant 14.07% of Nigeria’s N54.99 trillion 2025 national budget.
The rise in the subsidy debt follows the end of fuel subsidies announced by President Bola Tinubu in May 2023, which was intended to reduce economic barriers. However, the IMF and other financial bodies have raised concerns that the government may have quietly reintroduced the subsidies.
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