Nigeria Saves N1.83 Trillion in 2 Months After Removing Petrol Subsidy, FAAC Reveals

The Federal Government has made a huge saving of N1.83 trillion in less than three months after it stopped the payment of subsidy on petrol, The Nation has learnt.

The saving was made from the revenue that accrued into the federation account in June and July.

A source within the Federation Account Allocation Committee (FAAC) confirmed to our reporter that the amount was saved in the federation account as a reserve for future needs.

The source said that N1.05 trillion was saved from the N1.97 trillion revenue generated in June, while N779.89 billion was saved from the N1.746 trillion revenue raked in last month.

According to the source, the Minister of Finance and Coordinating Minister for the Economy (CME), Mr. Wale Edun, has briefed the heads of revenue generating agencies on what the government plans to do with the savings.

The CME said the Bola Ahmed Tinubu administration plans to use the money to execute projects without relying on borrowing.

On Sunday, President Tinubu told his hosts at the opening of the 63rd Nigerian Bar Association (NBA) annual conference that the country can no longer continue to service national debts with 90 per cent of its revenue.

Also at the inaugural Federal Executive Council (FEC) meeting yesterday, the President told his ministers that his administration will rather create a stable macroeconomic environment than borrowing more money to implement projects. He said Nigeria was no longer in a position to accumulate more debts.

The CME has since communicated the President’s position to FAAC members and the revenue generating agencies. The N1.831 trillion saving from the FAAC revenue, the official said, is domiciled in the federation account with the Central Bank of Nigeria (CBN).

It was learnt that the federal government has been able to persuade most FAAC members of the need to save from the revenue that will accrue to the Federation Account with the understanding that what will be shared amongst all the beneficiaries of the Federation Account will not go below a certain threshold.

“In the event that what is available for sharing in any particular month is below the agreed threshold, then FAAC will be at liberty to withdraw from the savings to augment for the month”, the source explained.

The source attributed the surge in revenue in two months to the government’s decision to stop subsidizing petrol. During last Wednesday’s inauguration of ministers in Abuja, Tinubu reaffirmed his unwavering dedication to ending the destructive pattern of heavily relying on loans to finance public spending. He acknowledged the hindrance of such reliance to prudent management of government’s limited revenue, and said loan servicing obligations consume significant portions of these funds.

His commitment, he explained, is to find alternative solutions to reduce borrowing for public spending and ensure a more sustainable fiscal plan for Nigeria. Briefing reporters at the State House after the maiden FEC meeting, Edun stated that the removal of petrol subsidy and exchange rate harmonisation does not signify any plans to obtain funds from local or foreign institutions through borrowing.

Instead, he said, the subsidy removal will enhance government revenue and facilitate a favourable business climate for local and foreign investment across diverse sectors. Edun stated that following the removal of petrol subsidy, there has been an increase in revenue, and the government has put in place several assistance options to ease the impact of the decision in the short, medium, and long term.

He emphasised the government’s commitment, led by Tinubu, to revive the economy from its current state.

The removal of fuel subsidy has been a controversial issue, but it is clear that the government is committed to this policy. The savings that have been achieved in the first two months are a good start, and it will be interesting to see how the government uses this money in the future

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