The removal of petrol subsidy in Nigeria in 2023 had a significant impact on the country’s revenue allocations from the Federation Account, totaling N10.14tn. This move led to an increase of N1.93tn compared to the previous year, as reported by the Nigeria Extractive Industries Transparency Initiative (NEITI).
President Bola Tinubu’s decision to eliminate fuel subsidy resulted in a spike in petrol prices, with rates soaring from N198/litre to around N500/litre. Subsequently, prices continued to rise, reaching N617/litre at NNPCL-operated stations and even higher at other locations.
NEITI’s Executive Secretary, Dr. Ogbonnaya Orji, emphasized the importance of transparency in disclosing Federation Account allocations to promote public accountability. The breakdown of the revenue distribution revealed that the Federal Government received 39.37%, while states and local governments received 35.34% and 25.28%, respectively.
The overall disbursements in 2023 saw a 23.56% increase, attributed to improved revenue remittances following the subsidy removal and exchange rate adjustments. While the Federal Government’s share rose by 16.79%, states and local governments experienced larger increases of 29.99% and 26.22%, respectively.
Notably, oil-producing states like Delta, Rivers, and Akwa-Ibom received substantial allocations, with Delta leading at N402.26bn. The 13% derivation revenue also played a significant role for mineral-producing states, surpassing their statutory revenues in some cases.
The report highlighted the fluctuation in revenue remittances due to oil and gas revenue variations, influenced by factors like crude oil prices and production disruptions. It underscored the need for conservative estimates in budget planning, economic diversification, and investment in sectors like power generation to reduce reliance on oil revenues.
NEITI’s recommendations included enhancing budgetary performance, promoting local production, and addressing insecurity in rural areas to boost economic growth. The Quarterly Reviews aimed to foster transparency and accountability in public finance management, urging collaboration between government entities and citizens for sustainable development.