FG, states, LGs share N760.7bn revenues for July
FG will use Eurobond cash, borrow more to pay subsidies- Finance Minister
The Federal Government has announced that it will use $2.2 billion of the fund raised via Eurobond to cater for petrol under-recovery costs just it would also target more local borrowing in 2022 to fund subsidy payments.
Recall that in September 2021, the government raised $4 billion through Eurobond issuance.
Subsidy or under-recovery is the under-priced sales of premium motor spirit (PMS), better known as petrol.
Minister of Finance, Budget, National Planning, Zainab Ahmed, who made this disclosure while speaking with Reuters on the sidelines of an Arab-African conference in Cairo, said Nigeria would not tap the Eurobond market this year.
“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,” she said.
The minister 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.
Oil prices have been on the rise following Russia’s invasion of Ukraine.
This has raised petroleum landing cost, thus widening market price and actual cost per litre.
For Nigeria, high oil prices mean high subsidy payments for the government to sell petrol below the international market rate.
The 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 recently importing off-spec petrol.
The government had planned to stop subsidy payments on petroleum products from July this year — but reversed its decision in January, extending it by 18 months instead.
It budgeted about N3 trillion for petrol subsidy in 2022.
