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Nigeria spent half 2012 fuel subsidy budget on arrears

30 May 2012, 15:20

Abuja - Nigeria has already spent half its 2012 fuel subsidy budget on arrears for last year, the finance ministry said on Wednesday, risking Africa's second-largest economy racking up further debt or running out of money to sustain huge subsidy payments.

Nigeria tried to remove gasoline import subsidies in January, but the move more than doubled the petrol price to 150 naira per litre, from 65 naira per litre previously, prompting more than a week of strikes and street protests.

The government backed down and partially reinstated the subsidy, bringing the price down to 97 naira per litre.

A parliamentary probe that followed uncovered a $6.8 billion fraud in the subsidy regime and said Nigeria spent 2.58 trillion naira last year on subsidy payments, more than 900 percent the budgeted amount for the year.

President Goodluck Jonathan, the state-owned oil company NNPC and the finance ministry pledged to clean up any inefficiencies, but the latest data shows spending remains out of control.

Nigeria budgeted 888 billion naira for fuel subsidies this year but it has already spent 451 billion naira on back payments for 2011, the state oil company and finance ministry said, more than double what it had expected to pay in arrears.

"This is clearly not sustainable and the ministry has a responsibility to ensure that the lapses that may have led to this unhealthy situation are not repeated," a statement from the finance ministry said on Wednesday.

Africa's biggest crude exporter will need to dip into its oil savings once the budgeted amount runs dry and with only around $3.5 billion in the excess crude account (ECA) it could be wiped out by the end of the year, economist have warned.  



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