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Playing ostrich? Nigeria plans to spend $2.2 billion Eurobond on fuel subsidy

Published

1 year ago

March 16, 2022

Nigeria’s Finance Minister, Zainab Ahmed, has revealed that the country plans to tap 2 billion euros ($2.2 billion) this month or next of the money it raised in a Eurobond sale last year and target more local borrowing in 2022 to help fund its costly petrol subsidies as oil prices rise.

“Rising oil prices has put us in a very precarious position because we import refined products … and it means that our subsidy cost is really increasing,” she said on the side-lines of an Arab-African conference in Cairo.

In February, Nigeria’s President Muhammadu Buhari in a letter sent to the National Assembly requested for consideration and approval to accommodate the additional fuel subsidy funding. The request was for an additional provision of N2.557 trillion for petrol subsidy payments in 2022 noting that country’s budget deficit would rise to 4% of GDP as the government eyes new domestic borrowing. The deficit was originally set at 3.42% of GDP.

Despite her increasing debt profile, Nigeria’s government in January postponed its planned removal of subsidy on petroleum products till further notice. Petrol subsidy payments reportedly gulped overN1.15 trillion 2021 alone, resulting in low revenue for federal, state and local governments to cater for developmental projects.

But the price of oil has soared. The West African country depends almost entirely on imports to meet its domestic gasoline needs, even though it is a crude oil exporter. It is also facing shortages after taking delivery of some unusable substandard gasoline.

While it remains unclear by how much the commencement of active local refining will reduce the landing cost of petrol, the Chairman of Dangote Group, Aliko Dangote, recently disclosed that its refinery would begin operations in Q3 2022, starting with a capacity of 540,000bpd.

Nigeria’s daily demand for refined crude oil was estimated at 442,000bpd, as of 2018, which still comes below the proposed initial capacity of 540,000bpd. Many other modular refineries are also expected to come on stream. Beyond a possible reduction in the landing cost of petrol, achieving self-sufficiency in refining petrol will help conserve the country’s scarce FX.

Ahmed said that the government was working with lawmakers to boost revenues and that the rise in oil prices means that borrowings will increase more than planned.

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Nigeria’s central bank governor, Godwin Emefiele suspended by President Tinubu

Published

14 hours ago

June 9, 2023

Ifeoluwa Dada

Nigerian president, Bola Tinubu has suspended the country’s central bank governor, Godwin Emefiele.

The office of the Secretary to the Government of the Federation announced the suspension of the Central Bank of Nigeria (CBN) head on Friday evening.

The director of information at the SGF office, Willie Bassey, in a statement, said the suspension was with immediate effect.

The CBN under Emefiele announced new designs of the N200, N500, and N1,000 notes in December. The implementation of the policy was however controversial as it launched an era of cash scarcity which some observers say was targeted at then ruling party’s candidate, Bola Tinubu, and some believe limited his chances.

Tinubu has signalled going in a different direction. During his inauguration speech, he pledged to pursue unification of the exchange rate windows and backed ease of repatriation of funds for foreign investors, policies that have not been favoured by the CBN under Emefiele.

Former president Muhammadu Buhari reappointed Emiefele for a second and final term of five years in 2019. He was appointed by former President Goodluck Jonathan in February 2014, hours after he announced the suspension of his predecessor, Sanusi Lamido.

He was the managing director of top Nigerian bank, Zenith Bank before his appointment .

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Ghana records 32% increase in gold production in 2022

Published

15 hours ago

June 9, 2023

Ifeoluwa Dada

West African country, Ghana has returned to top of gold production on the continent after displacing South Africa following a 32% increase in 2022.

According to the president of the mines chamber, gold output rose to 3.7 million ounces in 2022 from 2.8 million ounces the previous year, as a result of growth in the output of both large and small-scale sectors.

Joshua Mortoti, while addressing members of the Ghana Chamber of Mines at an annual general meeting revealed that “The large-scale gold sub-sector recorded its highest output in the country’s history in 2022.”

He further revealed that the expansion of production at existing mines facilitated the large-scale sector’s gold output up by 13% to 3.1 million ounces last year from 2.7 million ounces in 2021.

Over 77,620 ounces of gold were sold in 2022 under the Domestic Gold Purchase Programme, a scheme launched by the Bank of Ghana to boost reserves.

Mining is a major economic activity in Ghana and a key contributor to the Ghanaian economy. Gold mining accounted for 48.4% of gross merchandise exports in 2020.