The presidency says the most visible impact of the petrol subsidy removal is the increased allocation for states and local government areas (LGAs) in the country.
In a statement on Sunday, Bayo Onanuga, special adviser on information & strategy to President Bola Tinubu, responded to the recent comment of former Vice-President Atiku Abubakar on the petrol subsidy removal policy.
Atiku said Nigerians deserve explanation on the petrol subsidy savings, adding that it is false to say the savings are being used to fund workers’ welfare.
His statement followed the comment by Taiwo Oyedele, minister of finance and coordinating minister of the economy, that the federal government will soon publish a detailed account of how savings from the removal of petrol subsidy has been utilised.
According to the minister, a significant portion of the savings went into financing obligations that were previously funded through central bank financing, servicing higher debt costs following tighter monetary conditions, and implementing the new national minimum wage.
Onanuga said prior to the assumption of office by Tinubu’s administration, international institutions have called for the removal of petrol subsidy.
The spokesperson said Nigerians were suffering when resources were being used to pay “fuel-subsidy merchants”.
He added that the government in which Atiku served from 1999 to 2007, did not stop the payment of petrol subsidy.
Onanuga said increased revenue allocation has made states and LGAs to raise spending on infrastructure and salaries.
“It must be said that the government in which Alhaji Atiku was Vice President waded through that toxic phenomenon, and never did the needful,” Onanuga said.
“The current administration deserves commendation for being able to get rid of something that has become a lodestone around the neck of our collective patrimony.
“The visible consequence of subsidy removal has been the sharp improvement in revenues accruing to states and local governments through the Federation Account.
“Higher statutory allocations have expanded fiscal space at the subnational level, enabling many states to increase spending on roads, schools, hospitals, salaries, pensions, and social programmes. Independent assessments, including those from the World Bank, have noted improvements in public revenues and subnational capital spending, which is another word for infrastructural development, following major fiscal reforms.
“This means that President Tinubu has tactically placed more responsibility for socioeconomic development on states and local governments, while providing requisite funding.
“This is true federalism and a bold statement on the much-vaunted subject of economic restructuring – another important issue gallantly avoided by the government in which Alhaji Atiku served and wielded great influence.”
Tinubu announced the removal of petrol subsidy during his inaugural speech as president in 2023.