- As report forecasts petroleum subsidy reaching $5bn in 2018
Nigeria’s payment in petroleum subsidies may likely reach $5 billion on rising prices of crude oil at the international market, exceeding a previous forecast of $3.85 billion by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, a new report estimates.
“The rise in oil prices even though good for revenues, growth and the external reserves raises the spectre of record level petroleum subsidies in Nigeria reaching $5bn in 2018. “This will blow the lid off the fiscal deficit and may force the country into a short term funding crisis. Therefore, policy makers are slow to celebrate higher oil prices until they can curb what is looking like another subsidy scam or scandal,” Lagos-based economic research and analyses firm, Financial Derivatives Company (FDC) said in bi-monthly update report released Monday.
Meanwhile, the major oil marketers association of Nigeria (MOMAN), on Monday, asked the Nigerian government to pay up N130.7 billion ($359 miilion) in subsidy payments it owed the body, saying “non-payment creates a significantly negative impact on the operational efficiency of the downstream sector of the oil industry, thereby placing a severe strain on its efforts to continually invest in infrastructure and raise industry standards,” according to the MOMAN chair, Andrew Gbodume.
MOMAN, a downstream oil and gas group made up of six major marketers including 11Plc (formerly Mobil Oil Nigeria), Conoil, OVH Energy Marketing Limited, Forte Oil, MRS and Total said they expect payments “as soon as possible.”
It will be recalled that the Nigerian National Petroleum Corporation said in March that it was subsidizing the supply of petrol to the tune of N774 million every day.
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