Unrest in Nigeria’s Niger Delta is costing $1 billion (R8 billion) a month in lost oil revenues, while the nation is spending tens of millions of dollars a month in unsustainable fuel import subsidies, the central bank said.
“We are losing $ 1 billion per month of revenue from production because of the crisis in the Niger Delta, and we are spending a trillion naira on subsidies, so we have to find a way to exit from this,” Central Bank Governor Lamido Sanusi said.
He said the country’s National Economic Council agreed at a meeting yesterday that fuel subsidies must end.
“This year alone between January and May, the government spent about 150 billion naira on subsidies. The budget for subsidies of over one trillion naira is more than the entire capital budget of the federal government,” Sanusi said.
“This is clearly unsustainable.”
Reuters reports attacks on oil infrastructure by militants in the Niger Delta over the past three years have prevented Nigeria from pumping much more than two-thirds of its 3 million barrels per day (bpd) installed capacity.
Lower global oil prices of around $70 (R572) a barrel, one-half the levels seen in July last year, have further eroded foreign earnings.
Despite being the world’s eighth biggest crude oil exporter, Nigeria is forced to import about 85 percent of its petroleum product needs because of the chaotic condition of its four state-owned refineries.
But ending fuel subsidies is politically difficult in a country whose 140 million people, most of whom live on $2 (R16) a day or less, according to UN statistics, see cheap petroleum as one of the few benefits of five decades of oil extraction.
Pic: Nigerian oil pipelines