The World Bank has clamed that only half of the from the proceeds of subsidy removal are being remitted by the Nigerian National Petroleum Company (NNPC) Limited to the federation account.
Alex Sienaert, the World Bank’s lead economist for Nigeria, spoke on Monday during the launch of the May 2025 Nigeria Development Update (NDU) in Abuja.
President Bola Tinubu announced the removal of costly petrol subsidies shortly after he was sworn into office in 2023.
The president said the decision was part of efforts to grow the economy for national development.
Since the pronouncement, many Nigerians have expressed concerns about the opacity in the management of the subsidy gains
Last month, the IMF called for transparency in the management of the Nigerian oil sector, most notably proceeds of the subsidy removal.
“We have been commending bold reforms by the government, but we need to see a little more transparency in the oil sector to ensure that fuel subsidy removal can result in more flow of resources into government coffers,” an IMF official noted.
Speaking at the event, Sienaert said NNPC started using the official FX rate for transactions in October 2024, marking the end of implicit subsidies.
“Other things to keep an eye on at present include the good news, of course, that the PMS subsidy was effectively ended last October, but revenue gains from this are yet to fully flow to the federation,” he said.
“NNPC began applying the official exchange rates for all its kind of transactions and fiscal revenue calculations back in October, so no more implicit subsidy.
“But as of January, NNPC was still only transferring about half of the resulting revenue gains from the subsidy elimination to the federation, and that’s because of arrears and counter-arrears and what have you.
“It’s just going to be important in the coming months to keep tracking this, and ultimately that all revenue gains from the difficult job of eliminating the subsidy do flow to the federation, so that that can support a continued healthy fiscal picture, and in turn stand in on the government priorities for Nigeria.”
Last month, President Tinubu sacked the board of the NNPC Ltd, including Mr Kyari, and board chairperson Pius Akinyelure.
The president also approved Bayo Ojulari as the new GCEO of the NNPC and Ahmadu Kida as non-executive chairman.
It was reproted that EFCC has initiated an investigation into alleged abuse of office and misappropriation of funds by former top officials of the NNPC Ltd, including two former chief executives, Mr Kyari and Abubakar Yar’Adua.
Budgetary Implementation
The World Bank said Nigeria’s 2025 budget is ambitious and may face difficulty achieving its revenue targets.
Sienaert said key assumptions such as daily oil production of 2.1 million barrels and an average crude price of $75 may be too optimistic.
“Even with the very positive revenue sort of tailwind that I described, it looks like it’s going to be pretty hard to meet some of the ambitious revenue targets that are in there,” he said.
The World Bank official warned that failure to meet revenue expectations may lead to increased borrowing or renewed deficit financing through ways and means, which the government had pledged to avoid.
“If the financing requirements exceed what’s budgeted, then that’s either going to create arrears, pressures, which is not healthy for the public finances or the economy, or it could renew risks of recourse to things like deficit monetisation under large-scale ways and means,” he said.
