Business
Governors Lament Rising Petroleum Subsidy
Governors in Nigeria under the aegies of the Nigeria Governors’ Forum (NGF) have lamented over the rising subsidy on petroleum products, particularly Premium Motor Spirit (PMS), saying it has placed immense financial burden on States.
NGF, the umbrella body for the 36 State Governors in Nigeria, disclosed this in a memo forwarded to the House of Representatives.
The memo, which was signed by the Head, Legislative Liaison, Peace and Security, NGF, Fatima Usman Katsina, for Chairman of the Forum, is in response to the call by the House for memoranda by the Ad Hoc Committee on the Volume of Fuel Consumed Daily in Nigeria, tasked with investigating the actual amount of PMS the country consumes daily.
Titled “Findings on the Volume of Fuel Consumed Daily in Nigeria”, and dated July 1, 2022, the memo was addressed to the Committee’s Chairman, Abdulkadir Abdullahi.
It stated in part: “Although the operating environment has significantly worsened since the report was released, with NNPC (Nigeria National Petroleum Company) now consistently reporting zero remittance to the Federation Accountant as profit from joint venture, production sharing contract and miscellaneous operations, the position of the forum remains generally the same”.
The governors referred the House to a November 2021 report by its National Executive Council’s ad hoc committee interfacing with the Nigeria National Petroleum Corporation (NNPC) on the appropriate pricing of PMS in Nigeria, which was chaired by Governor of Kaduna State, Nasir el-Rufai, and had governors of Edo, Jigawa, Ebonyi, Akwa Ibom and Ekiti, as well as the Governor of the Central Bank of Nigeria; Minister of Finance, Budget and National Planning; Accountant-General of the Federation, Group Managing Director of the NNPC and the Permanent Secretary, MBNP.
They also recalled how the report noted that the “federation (FAAC) net oil & gas revenues have been declining since 2019 and are projected to decline significantly in 2022 by between N3bn and up to N4.4bn unless action is taken now.”
The memo further read, “The following are some of the major findings relating to the volume of fuel consumed in the country:
“Remittances to the Federation Account Allocation Committee have continued to shrink as NNPC recovers shortfall quite arbitrarily from the Federation’s crude oil sales revenue. FAAC deductions for PMS subsidy are above 2019 levels, even without adjusting for reduced purchasing power of the naira due to inflation and FX rate deterioration.
“An analysis of the average monthly PMS consumption by states showed that a third of the country accounts for over 65 per cent consumption of PMS. The analysis showed that the following States of Lagos, Oyo, Ogun, Abuja, Delta, Kano, Kwara, Edo, Rivers, Kaduna, Kebbi and Adamawa accounted for 65 per cent of PMS consumption in the country. Most states with high PMS consumption either have borders with neighbouring countries or are in close proximity, this has been an avenue for smugglers to benefit from profitable arbitrage opportunities in PMS pricing.
“Households directly consume only about 25 per cent of the PMS that is consumed nationally, with the remaining three-quarters being consumed by firms, MDAs, transport operators or smuggled to neighbouring countries where the PMS price is nearly three times what it is in Nigeria; and of the PMS consumed by households, the richest 40 per cent of households account for over three-quarters of the PMS purchased by households, while the poorest 40 per cent of households purchased less than 3 per cent of all PMS sold in Nigeria.
“In the current fiscal regime, remittances to FAAC would continue to shrink as NNPC recovers this shortfall from the Federation as a result of crude oil price recovery.
“The report recommended a PMS pricing structure that addresses regional arbitrage and smuggling of PMS and provides additional revenue to the Federation Account.
“There is a significant market opportunity for additional export revenue streams for Nigeria to be had given the price parity with our neighbouring countries.
“Privatisation of the three government refineries as is, or after their full rehabilitation if affordable and viable, and expediting the licensing procedure for modular refineries will reduce the recurring government expenditure on refinery maintenance and increase the country’s refining capacity.”
The governors noted that there were also economic risks highlighted in the report. “Fiscal pressures are threatening Nigeria’s recovery, as rising prices continue to push millions into poverty,” they said.
According to the memo, “Rising prices are pushing millions of Nigerians into poverty. Rising inflation between 2020 and 2021 is expected to have pushed an additional 5-6 million Nigerians into poverty.
“Food insecurity is increasing in both poor and non-poor households, with some adults skipping meals. Because inflation is high, even if it remains stable, it will continue to push many more Nigerians into poverty.
“Fiscal pressures are growing unsustainably with the PMS subsidy significantly reducing the flow of revenues into the Federation Account.
“Thirty-five out of 36 states are likely to see transfers from the federation fall (in nominal terms) between 2021 and 2022, with the average decline projected to be about 11 per cent. Most states are already experiencing fiscal stress, with 30 out of 36 states recording fiscal deficits in 2020, including Lagos and every oil-producing state except Akwa Ibom.
“With the projected decline in gross distributable federation revenues in 2022, fiscal deficits and debt burdens will grow even larger and faster. This will mean that transfers from the federation will not be enough to cover even salaries, and certainly not recurrent costs, which are growing in nominal terms.
“With the coming into effect of the Petroleum Industry Act, gross oil & gas revenues could be (much) lower than currently projected because of the new fiscal terms and the earmarking of deductible revenues specified in the PIA, and that could reduce net oil & gas revenues even further”.
Consequently, the NGF stated that greater accountability and transparency around oil and gas revenues “are the only immediate options for easing the pressure on government finances and maximising socially responsible profit gain.”
Cornerstone of Financial Services
A survey of more than 1 000 global finance leaders undertaken by digital payment network Ripple shows that 72% of respondents believe they need to offer a digital asset solution to remain competitive.
According to Ripple, leaders from the banking, fintech, corporate and asset management sector have made it clear that the “digital asset revolution is happening now”.
“Digital assets are quickly becoming a cornerstone of financial services, underpinned by progressive regulation, growing interest from Tier-1 banks, a steady consumer shift from banks to fintech providers, and booming stablecoin adoption,” Ripple says.
The survey was conducted in early 2026 and the findings released in March.
Stablecoin Boon or Bane?
Ripple has experienced significant success in the stablecoin sector since launching its Ripple USD (RLUSD) stablecoin in 2024.
With a market cap of $1.56 billion, it is considered a major regulated player in the market.
No doubt the platform was pleased to learn through its own survey that financial leaders were most bullish about stablecoins.
Roughly three-quarters of respondents believed they could boost cash-flow efficiency and unlock trapped working capital.
Ripple noted that finance leaders were thinking about stablecoins as more than “just a new way to execute payments”; instead, they viewed them as effective tools for treasury management.
In March 2026, Ripple began testing a new trade finance model built around RLUSD in a bid to increase the speed of cross-border payments.
The pilot initiative, developed alongside supply chain finance company Unloq [https://unloq.com], is running on the XRP Ledger inside a testing framework developed by the Monetary Authority of Singapore.
The Asian city-state is one of the platform’s biggest growth markets.
The idea behind the project is to see whether stablecoin-based settlement can streamline trade finance, too often hampered by reliance on intermediaries and slow reconciliation.
The only potential drawback is that if the initiative takes off, the Ripple to USD price could be negatively affected.
Ripple has always championed its native XRP token as a bridge asset, the “middleman” in the process of a financial institution turning dollars in the US into pounds in the UK, for example.
Ripple converts dollars into XRP and then back into pounds.
If RLUSD can do exactly the same thing, questions will be asked about XRP’s relevance.
That is a bridge Ripple will have to cross if it gets to that point.
Tokenisation Partners
Another interesting finding from Ripple’s survey is that most banks and asset managers are seeking tokenisation partners to help execute their strategies.
Some 89% of respondents said digital asset storage and custody were top priority. “Token servicing/lifecycle management also ranks highly for banks at 82%, while asset managers place greater emphasis on primary distribution at 80%,” Ripple found.
The survey also revealed that just more than half of fintechs and financial institutions want an infrastructure provider that can offer a “one-stop-shop solution”. This rose to 71% among corporate financial leaders.
Ripple attributes this to institutions and firms wanting uncomplicated, cohesive systems.
Infrastructure Rules
In its final analysis, Ripple says companies across the board are looking for partners and solutions that are “secure, compliant, battle-tested and that enable growth and execution”.
“The message is clear: infrastructure decisions made today will shape competitive positioning tomorrow.”
No surprise that this is precisely where Ripple is placing much of its focus.