Vice President Yemi Osinbajo has said
the Federal Government, which relies on crude oil for about two-thirds
of its revenue, is seeing a silver lining to the plunge in crude prices
because it will no longer have to subsidise fuel.
“Lower oil prices also mean there is
some advantage,” Osinbajo said in a panel discussion at the World
Economic Forum in Davos, Switzerland, on Thursday.
The decline “means that we are not
paying any subsidies, which frees up something in the order of about
$5bn (about N985bn),” Bloomberg quoted the vice president as saying.
Brent oil in London has dropped more
than 60 per cent to below $28 a barrel since November 2014, as shale
production from the United States increased and the Organisation of
Petroleum Exporting Countries refrained from cutting output in the face
of a global oversupply in an effort to defend market share.
Nigeria, Africa’s largest oil producer,
will still face challenges in financing its budget deficit and aims to
increase Value Added Tax and customs duty collection to help plug the
gap, Osinbajo said.
“We think with adequate governance
around budget management and around expenditure management, we can do
quite a bit. If we are able to do those things, we might be able to come
away with under $30 a barrel oil,” he explained.
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