Nigeria Loses $16 Billion Foreign Exchange to Oil

Diezani Allison-Madueke has served as the Oil Minister of the reconstituted cabinet of the Federal Republic of Nigeria. She was assigned to the post by President Goodluck Jonathan., a photo by Pan-African News Wire File Photos on Flickr.

Nigeria loses $16bn foreign exchange to oil subsidy

December 23, 2011 12:32PM
Nigeria Next

The Central Bank of Nigeria (CBN) Governor, Sanusi Lamido, on Thursday said the Federal Government lost about 16 billion dollars in 2011 to oil subsidy.

Lamido said this at the Second Town Hall Meeting of the Nigerian Proprietors Association of Nigeria with the title: "Removal of Petroleum Subsidy: In Whose Interest ?''.

According to him, between January and November, 2011, foreign exchange worth eight billion dollars were sold to oil marketers by the apex bank.

"They also received eight billion dollars as subsidy during the period," the apex bank governor said.

He said that the government earned less than 200,000 dollars for that period due to losses and that by implication the government resorted to borrowing to pay the oil marketers.

Sanusi said that the removal of the subsidy would put an end to borrowing.

He said that it might get to a stage where the country would experience financial crisis if the subsidy was not removed.

The apex bank governor said that the situation might be worse than what Greece was currently passing through.

Sanusi said that the government could at the moment conveniently pay for the subsidy, but it might not go beyond 2015 when another administration would be in power.

He said that fuel constituted only two per cent weight of the Consumer Price Index (CPI), which he said, was marginal..

Sanusi urged the Federal Government to subsidise domestic production to create jobs for the youths, rather than importing the product.

Finance Minister Ngozi Okonjo-Iweala said that subsidy removal would reduce the nation's financial burden.

Okonjo-Iweala, also the coordinating minister for the economy, said that the subsidy removal would free financial resources to develop activities in other sectors.

She said that this would also make for freer regulation and promote transparency within the sector.

The coordinating minister said that it would attract new investors and increase competition and promote productivity in the sector.

Okonjo-Iweala said that part of the savings would be used for other pressing social and infrastructure development.

She said that government would try all its effort to ensure that the cabal in the oil sector that would not allow government to know the actual oil sales would be brought to book.

Okonjo-Iweala urged the journalists to use their investigative skills to identify the cabal, adding that the Economic and Financial Crimes Commission (EFCC) should go after them for prosecution.

Also speaking, Mrs Diezani Madueke, the Minister of Petroleum Resources, said that there would be more inflow of foreign investors into the sector if it was deregulated.

Madueke said that the multiplier effects of the deregulation would be high if government could effectively utilise money that would be saved from the subsidy removal.

She said that overhauling of the nation's refineries was one of the challenges currently facing the Federal Government.