Nigeria to Use Borrowed Fund for Subsidy Payment as Russia-Ukraine War Stretches Buhari's Govt Finances

Nigeria to Use Borrowed Fund for Subsidy Payment as Russia-Ukraine War Stretches Buhari's Govt Finances

  • The administration of President Muhammdu Buhari has concluded its plan to use borrowed funds to finance subsidy payment
  • Nigeria's finances are not in good health and have been compounded by Russia, Ukraine war which has raged on for over a month
  • Nigeria in 12 months of 2021 spent over 1.4 trillion on subsidy payment, a figure which is expected to become higher in 2022, as oil trades above $100 per barrel

The Minister of Finance, Budget and National Planning Zainab Ahmed has revealed a plan by the Federal Government to use part of the $2.2 billion raised through Eurobond in September of 2021, to fund fuel subsidy payment.

According to Reuters, she said this on the sidelines of an Arab-African conference in Cairo.

According to Ahmed, fuel subsidy is becoming too expensive and need additional finance to cover the payment.

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Nigeria to Use Borrowed Fund for Subsidy Payment as Russia-Ukraine War Stretches Buhari's Govt Finances
CBN governor Godwin Emefiele and Minister of Finance Zainab Ahmed Credit: statehouse
Source: UGC

Ahmed said:

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“Rising oil prices have put us in a very precarious position because we import refined products and it means that our subsidy cost is increasing."

Fuel subsidy removal

Legit.ng had earlier reported that the federal government budgeted about N3 trillion for fuel subsidy payments in 2022.

In the full year of 2021, data obtained from the Nigerian National Petroleum Corporation shows the Petrol subsidy payments gulped N1.43 trillion, shrinking revenue accrued to the federation account to N542 billion

Fuel subsidy has been a subject of intense controversy between the Government and labour unions who threaten strike if the subsidy was removed in July 2022.

Bowing to pressure the federal government move the removal date by 18 months in view of the rehabilitation of refineries and completion of Dangote's refinery.

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Since the decision, the price of crude oil has soared, making importation very expensive.

MRS fingers NNPC over fuel Scarcity

Legit.ng reported that the management of MRS Oil Nigeria Plc has cleared the air on how the Nigeria Petroleum Corporation brought bad fuel into the country which is causing scarcity and an increase in the cost of transportation.

MRS also dissociated itself from reports making the rounds on social media that it is responsible for the contaminated product in Nigeria and the company is a responsible corporate citizen who will not go out of its way to harm other citizens.

According to MRS, the NNPC is the sole importer of PMS into Nigeria and the NNPC, through their trading arm, Duke Oil, supplied a cargo of PMS bought from an International trader. Litsaco and delivered it with Motor Tanker (MT) Nord Gainer.

Source: Legit.ng

Authors:
Dave Ibemere avatar

Dave Ibemere (Senior Business Editor) Dave Ibemere is a senior business editor at Legit.ng. He is a financial journalist with over a decade of experience in print and online media. He also holds a Master's degree from the University of Lagos. He is a member of the African Academy for Open-Source Investigation (AAOSI), the Nigerian Institute of Public Relations and other media think tank groups. He previously worked with The Guardian, BusinessDay, and headed the business desk at Ripples Nigeria. Email: dave.ibemere@corp.legit.ng.

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