Nigeria: CBN reports on petroleum subsidy

The Central Bank of Nigeria (CBN) has reported that the federal government paid a total of N1.76 trillion as petroleum subsidies in 2011, as opposed to the N1.5 trillion that had been widely announced. CBN made this revelation on 24 January to the House of Representatives Ad Hoc Committee on fuel subsidy regime monitoring.

Deputy CBN governor Kingsley Moghalu, who represented governor Sanusi Lamido Sanusi, noted that the bank plays a limited role in fuel subsidy management but must 'ensure monetary and price stability.' He said the Petroleum Stability Fund (PSF) has its account domiciled in the CBN and operated by the Petroleum Products Pricing Regulatory Agency (PPPRA). Moghalu explained further that the 'account was opened on 15th of December 2001 and credited with N673.85 billion, and N 666 billion has been withdrawn, leaving a balance of N6.257 billion.'

Also, the deputy governor revealed that the Excess Crude Account (ECA) is domiciled in the CBN and operated by the Accountant General of the Federation (AGF). It had a credit balance of N2,562.78 billion between 25 September 2007 and January 2012. As of 17 January this year, the ECA balance was N 19,261 billion. It was also noted that subsidy went up eightfold in 2009, totalling over 110 per cent, and by October 2011 it had hit over 500 per cent.

Moghalu said this led to a high demand for foreign exchange, prompting the CBN to set up a special foreign exchange audit to determine the veracity of the demand. 'The audit is ongoing and this really put so much pressure on the forex market,' said Moghalu. 'In 2009, the total sales of foreign exchange was $38 billion, and $9 billion was sold to the oil sector alone.'

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