The World Bank disclosed that the Nigeria National Petroleum Corporation Limited, NNPCL is not transparent about the financial gains from the fuel subsidy removal.
The bank noted that this extends to subsidy arrears that are still being deducted and the impact of subsidy removal on federation revenues.
The Washington-based bank made this call in its Nigeria Development Update, December 2023 edition titled, ‘Turning The Corner (from reforms and renewed hope, to results).
This is as the Minister of Finance and Coordinating Minister of Economy, Wale Edun, revealed that the government was ready to scrutinise the revenue flow from the NNPCL.
According to the World Bank, while revenue gains from the exchange rate reforms are visible, more clarity is needed on oil revenues, including the fiscal benefits from the PMS subsidy reforms.
It declared that “nominal oil revenue gains have been evident since June; these are mostly categorised as “exchange rate gains”, suggesting that they are due to the naira depreciation.
The Bretton Woods institution further expanded that gains in net oil revenue of the federation were lower than what they should have been considering what the removal of fuel subsidy should have added to the accounts.
It stated that fuel subsidy cost the federation about N380bn a month, and once removed, the federation account should have recorded an increase in net oil revenues.
The institution further noted that the reform of fuel subsidy should help the NNPCL to settle its arrears and start paying fully for the Federation’s share of costs in joint venture operations, thereby allowing oil production to gradually increase over time.
Also speaking at the presentation of the report, the Coordinating Minister of the Economy, Edun noted that the removal of fuel subsidy saved the government’s finances.
He stated that while expectations that subsidy removal should boost the government’s revenue, it was faced with debt funding and a high fiscal deficit.
