Prof. Osinbajo who made the disclosure on the sidelines of the World Economic Forum (WEF) in Davos, Switzerlandon Thursday said the federal government which relies on crude oil for about two-thirds of its revenue, is already 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. The decline means that we are not paying any subsidies, which frees up something in the order of about $5bn (about N985bn),” Osinbajo told participants at a panel discussion at the WEF.
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.
By Olisemeka Obeche (with agency reports)