Subsidy payment increases reduce funds for infrastructure development – Rewane

Analysts at the Financial Derivatives Company Limited, led by economic expert Bismarck Rewane, said they expect the positive sentiment of rising global demand to continue to impact the oil market in the next four to six weeks, keeping oil prices elevated above $70 per barrel.

They said in a new report, “While this is good news for Nigeria in terms of increased government revenue and dollar cash flows, it also has its downside.

“Since Nigeria imports all its refined crude, higher oil prices amid an exchange rate adjustment implies that landing costs have increased.

“Since fuel prices remain unchanged at N165/litre, it could mean that subsidy payments have increased, reducing the funds available for infrastructure development. Or, it could signify another petrol price increase in subsequent months. If this happens, it could stoke social unrest in an already terse socio-economic environment.”