The Federal Government (FG) has concluded plans to tap $2.2 billion from the money it raised in a Eurobond sale last year (2021) to fund Nigeria’s fuel subsidy. This is according to Ahmed Zainab, the Minister of Finance, Budget and National Planning.
Speaking in Cairo, Egypt, on the side-lines of an Arab-African conference, Zainab said the $2.2 billion would be tapped either this month (March) or next (April) for the purpose of funding the country’s fuel subsidy, adding that it was necessary as there is a rise in crude oil prices on a global scale.
BizWatch Nigeria understands that on Tuesday, March 15, Nigeria’s crude oil production dropped from the 1.399 million barrels per day figure recorded in January to 1.258 million barrels per day in February.
This decline indicated a daily crude oil production loss of 141,000 barrels in the month of February 2022, according to the latest monthly oil market report for March 2022 released by the Organisation of Petroleum Exporting Countries (OPEC).
The recent spike in crude prices triggered by the ongoing war between Russia and Ukraine had, however, resulted in an increase in the cost of refined petroleum products. And in view of the fact that these commodities are largely imported into Nigeria for public consumption, the government is left with no choice, but to increase its subsidy payments.
“Rising oil prices have put us in a very precarious position … because we import refined products … and it means that our subsidy cost is really increasing,” Reuters quoted the minister as saying.
Despite a series of warnings by financial bodies and economic stakeholders, the fuel subsidy, according to Reuters, cost Nigeria up to $7 billion a year in revenue.
While disclosing how the incumbent government tends to fund the subsidy, Zainab said the President Muhammadu Buhari-led administration is working with lawmakers to boost revenues and that the rise in oil prices meant that borrowings would increase more than planned.
