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Nigeria’s oil subsidy could hit $16.2 billion in 2023 but government isn’t ready to bell the cat yet

Published

2 years ago

July 22, 2022

The sorry tale of Nigeria’s oil subsidy regime could become messier as the Finance Minister, Zainab Ahmed has revealed the West African could spend up to 6.72 trillion naira ($16.2 billion) next year on subsidy.

The minister said fuel subsidy could rise to nearly 70% jump from this year’s budget if it keeps it place.

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.

The minister made the revelation during a pre-2023 budget consultation in the federal capital Abuja. The second option “assumes that petrol subsidy will remain up to mid-2023…, in which case only 3.36 trillion (naira) will be provided for.”

“Revenue performance is expected to improve in the second half of 2022 as a result of concerted efforts to address the oil theft and pipelines vandalism,” the finance minister said.

Ahmed said the federal government was working with two scenarios, one that assumed a “business-as-usual” approach where a subsidy would be in place throughout 2023 and would cost 6.72 trillion naira.

Although Nigeria is one of the largest oil producers in the world, the West African country does not refine crude oil locally. State-owned Nigerian National Petroleum Corporation (NNPC) has four refineries, two in Port Harcourt (PHRC), and one each in Kaduna (KRPC) and Warri (WRPC) but none has worked to capacity for years despite several investments to succinate the refineries.

Nigeria exports its oil for refining, and pays heavily to import the refined products and sell the Premium Motor Spirit at subsidized rate to final consumers. There has always been discrepancy on the actual figure of consumed petroleum product in Nigeria. The subsidy regime has eaten the country deeper than it can afford.

With the 2023 elections in sight, the Nigeria government appears not ready to bell the cat on the subsidy regime.

Related Topics:Featured Fuel subsidy Nigeria

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Moroccan annual inflation rises to 0.8% in November

Published

1 day ago

December 21, 2024

Ifeoluwa Dada

Morocco’s statistics office has confirmed that the country’s annual inflation rate, as determined by the consumer price index, increased from 0.7% in October to 0.8% in November.

Monthly, consumer prices decreased by 0.2% from October.

The primary driver of inflation, food costs, grew by 0.8% compared to the previous year, while non-food inflation climbed by 0.7%. Core inflation, which does not include more erratic items like food, increased 2.6% annually and 0.2% monthly.

According to the central bank, inflation is expected to average 1% this year, down from 6.1% last year.

Despite the Al-Haouz earthquake, a spike in inflation, and worldwide economic challenges, Morocco’s GDP grew by 3.4% in 2023.

A recovery in tourism, robust industrial exports, and rising private consumption—all bolstered by prudent macroeconomic policies—were the main drivers of growth.

VenturesNow

Nigeria’s $42bn foreign reserves enough for 9 months’ imports— Central Bank

Published

2 days ago

December 20, 2024

Ifeoluwa Dada

According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), the nation’s $42.01 billion in foreign reserves can cover imports of goods and services for almost nine months.

Cardoso promised Nigerians improved economic fortunes in 2025 while addressing the Senate Committee on Banking, Insurance, and Other Financial Institutions yesterday in Abuja at the presentation of the performance index report.

Cardoso stated: “External Reserves rose from $ 38.35 billion it was on September 30, 2024, to $ 42.01 billion as of December 12, 2024”.

He clarified that third-party receipts in Q3 2024 and revenues from taxes connected to crude oil were the main drivers of the rise in foreign reserves during the specified time.

“We saw remarkable improvements in our trade balance and maintained a current account surplus,” he added.

“Our external reserves level can finance over 9.09 months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks”.

On cash shortage, the CBN boss reiterated the N150 million fine against any branch of banks caught illegally distributing new Naira notes to currency hawkers and unscrupulous elements and said the Nigerian economy will improve in 2025 through policies and measures.

He predicted a stronger economic future: “Despite our economy’s challenges, there are clear reasons for optimism.

“The gradual stabilization of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”