The removal of the fuel subsidy by President Bola Tinubu’s administration has drastically increased the revenue allocated to the federal, state, and local governments. According to Sunday Dare, Special Adviser on Media & Public Affairs to the President, the monthly disbursements from the Federation Account Allocation Committee (FAAC) surged from N760 billion in 2023 to N3.2 trillion in 2024.
Revenue Boost and Financial Implications
Speaking on Arise Television’s Prime Time, Dare explained that prior to the subsidy removal, Nigeria was losing approximately $7.5 billion annually. He described the subsidy system as unsustainable and riddled with inefficiencies and corruption. He urged Nigerians to hold state governors accountable for the effective use of the substantial resources now available to them, emphasizing that the additional funds should be directed toward critical areas such as human capital development.
“Sometimes, if you refuse to take the stitch you need in time, you have to take so many stitches down the road. This country was hemorrhaging,” Dare remarked, underscoring the long-term financial damage caused by the subsidy.
Historical Context
For over three decades, successive administrations avoided removing the fuel subsidy despite its flaws. Dare highlighted that 87 Nigerian companies and individuals were implicated in subsidy scams that cost the nation billions. The subsidy system was described as a significant drain on national resources, with corruption undermining its intended benefits.
“At the point he [President Tinubu] came in, two brakes were necessary. You look at 30 years of this country skirting around subsidy removal. We were hemorrhaging $7.5 billion every year,” Dare said.
FAAC Disbursements Surge
The impact of subsidy removal has been particularly notable in FAAC allocations. In 2023, monthly disbursements to the three tiers of government totaled N760 billion, but by 2024, this figure skyrocketed to N3.2 trillion. This sharp increase reflects the additional revenue freed up by eliminating subsidy-related expenditures.
Dare elaborated, “The resources that have been freed up for human capital development are significant. In 2023, N760 billion was shared monthly by the 36 states and the federal government. As of 2024, that figure has moved to N3.2 trillion. Every month, these monies are shared. Subsidy removal has freed up resources, and if the subsidy had not been removed, we would not have seen this increase.”
Call for Accountability
Sunday Dare stressed the importance of ensuring that the newly available resources are effectively utilized, particularly at the state level. He urged Nigerians to demand accountability from their governors to ensure that the additional funds translate into tangible development.
State-Level Impact
Imo State Governor Hope Uzodimma described the removal of the fuel subsidy as a “direct blessing” to states, emphasizing the positive fiscal impact on sub-national governments.
Key Highlights
– Pre-2024 FAAC Allocations: N760 billion monthly.
– 2024 FAAC Allocations: Increased to N3.2 trillion monthly.
– Fuel Subsidy Losses: Estimated at $7.5 billion annually before removal.
– Corruption: 87 Nigerian companies and individuals implicated in subsidy scams over the years.
– Budget Impact: Freed resources for human capital development and other critical investments.
The removal of the fuel subsidy has significantly boosted FAAC disbursements, providing an opportunity for enhanced governance and development. However, the effective utilization of these funds depends on transparency, accountability, and strategic investment by the federal and state governments.
