The Minister of Finance, Zainab Ahmed, on Thursday said that Nigeria is barely able to cover the cost of imported petrol from its exported oil and gas revenues.
Ahmed made the claim in an interview with Reuters in Davos, Switzerland at the World Economic Forum.
The minister said she hoped Nigerian oil production would average 1.6 million barrels per day (bpd) this year, up from around 1.5 million bpd in the first quarter of the year.
Note that while Nigeria is one of the world’s biggest exporters of crude oil, it largely imports refined petroleum used in the country as most of the local refineries are not functional.
“We are not seeing the revenues that we had planned for. When the production is low it means we are … barely able to cover the volumes that are required for the (petrol) that we need to import,” Ahmed said.
Recall that Nigeria raised $1.25 billion via a Eurobond sale in March this year at a premium rate and had planned to issue another bond.
However, the minister said that the federal government had “not seen a good opportunity to go in.”
The Central Bank of Nigeria (CBN) had earlier this week raised its main lending rate by 150 basis points to 13%, after inflation rose to 16.82% in April. This is the highest in the past eight months, a move which was necessary according to Ahmed.
But the U.S. Federal Reserve’s interest rate has increased, including a 50 basis point rise earlier this month, with the ongoing Russia-Ukraine war.
There is also a coronavirus lockdown in China which has prompted a move from riskier emerging markets to safe havens.
The finance minister expressed fear over the US Federal Reserve tightening policy, saying, “We are certainly very, very concerned. “The actions that the Fed or the central bank in Europe take will affect us.”
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