By Dan Burns

DAVOS (Switzerland) – Nigeria’s low production means that it is unable to pay for imported petrol using its oil and gas revenues, said Finance Minister Zainab Ahmed, Reuters, on Thursday.

In an interview with the World Economic Forum, Davos Ahmed stated that she hopes Nigerian oil production will average 1.6million barrels per daily (bpd), up from 1.5 million in the first quarter.

Ahmed claimed that the production budget of 1.8million bpd had been set by government officials. Ahmed blamed attacks on oil infrastructure and crude theft for this shortfall.

Ahmed explained that the company is not seeing the expected revenue. “When production is low, we are… barely capable of covering the quantities that we will need for (petrol),” Ahmed said.

Nigeria is a country that exports crude oil but imports refined petroleum, and has experienced intermittent fuel shortages. The country is facing double-digit inflation, low growth and shrinking labor markets. There are also mounting insecurity.

It was decided to scrap the plan for a complete elimination of its petrol subsidies, but this was before national elections took place in February 2023. In order to pay it off, an additional $9.6 billion was planned.

Nigeria was able to raise $1.25billion through a Eurobond sales in March, at a premium interest rate. It had also planned to issue another bond. Ahmed stated that the government has “not seen any good opportunity to enter.”

Fuel subsidy is expected to increase the deficit to 4.5% of GDP, which will be an increase from the original budget estimate of 3.42%.

After inflation rose to 16.82%, Nigeria’s central Bank surprised the markets by increasing its main lending rate 150 basis points to 13%. This is after eight-months of record highs.

Ahmed stated that the move by the central bank was needed.

The U.S. Federal Reserve’s recent interest rate increases, which included a 50-basis point rise in the middle of this month, along with Russia’s conflict in Ukraine and coronavirus locksdowns in China, have caused a shift from emerging markets that are more risky to safer havens.

Ahmed expressed concern about the Fed’s tightening of policy. We will be affected by the actions of the Fed and the European central banks.”