The World Bank has established that Nigeria is not fully benefitting from the current oil boom.
This was made known in the November 2021 edition of its Nigeria Development Update tagged, “Time for Business Unusual.”
According to the World Bank, the Nigerian government’s fiscal position typically improves when oil prices rise, but this will not be the case in 2021.
The report established that in contrast with past periods of high oil prices, two factors are preventing the government from fully benefitting from the current boom. They include, firstly, a drop in oil production and secondly, increasing cost of PMS subsidy
According to the report, “Oil production has fallen below Nigeria’s estimated capacity and the OPEC+ quota due to inefficiencies and emergency shutdowns in the production and distribution processes for Bonny Light, Escravos, and Qua Iboe crudes.”
The World Bank established that while domestic price of PMS has remained fixed, global PMS prices have risen, therefore increasing the cost of the PMS subsidy.
The report said, “Nigeria is the only country in the world that subsidizes only PMS; most Governments end the PMS subsidy first. The Nigeria National Petroleum Corporation (NNPC) deducts the cost of the PMS subsidy from the oil and gas revenues that it transfers to the Federation Account.
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