Federal government is optimistic about funding its 2021 budget due to rising oil prices, but is engaged in a “tussle” with organised labour over how it can end fuel subsidies without harming the poor, Finance Minister Zainab Ahmed said on Monday.
Oil prices, which are averaging around $10 per barrel above the level projected for the 2021 budget, are good for the nation’s revenues, she told journalists, but are complicating plans to end costly fuel subsidies.
“We made recommendation to deregulate the pricing of (gasoline). But we have a stalemate with labour,” she said, calling the oil price rise a “double edged sword”.
The government promised an end to the fuel subsidies last year, which have cost the government billions of dollars, but rising oil prices have complicated the effort.
State oil company NNPC is negotiating with organised labour to find a way to allow petrol prices to float without unduly harming the nation’s poor and working class.
Ahmed said they did not plan to pay subsidies, and that officials hope the cost of importing fuel does not reduce NNPC’s remittances to the federal government.
Oil prices are averaging around $50 per barrel, above the $40 per barrel projected in the 13.6 trillion naira ($35.74 billion) budget document.
Ahmed also said discussions were ongoing over concerns brought to the World Trade Organization regarding Nigeria’s foreign exchange management. She declined to elaborate beyond saying the discussions were “a work in progess”.
The WTO is concerned about how Nigeria’s foreign exchange management has been used to support manufacturing, exports and imports, its director-general Ngozi Okonjo-Iweala – a former Nigerian finance minister who took the top job at the WTO this month – said on Monday.