World Bank Seeks More Clarity On Oil Revenue Earnings From Nigeria National Petroleum Corporation

The World Bank has sought more clarity from state-run oil company National Petroleum Corporation (NNPCL) on its fuel subsidy revenue.

The international financial institution slammed NNPCL's lack of transparency in its Nigeria Development Update (NDU), titled "Turning the Corner," released Wednesday.

The Nigerian government ended the gasoline (premium motor spirit) subsidy and shifted to a unified, market-reflective foreign exchange (FX) rate model in May. These actions increased retail gasoline prices by an average of 163%. Nigeria recently launched a cash transfer scheme to mitigate the impact of increased gasoline prices on the poor and vulnerable.

Shubham Chaudhuri, World Bank director for Nigeria, noted that though the petrol subsidy and FX management reforms are critical for improving the economy, the nation should ensure coordinated fiscal and monetary policy actions in the short to medium term.

"Continued reform implementation can ensure that Nigeria benefits from the difficult adjustments underway. This includes ensuring that improved oil revenues following the sharply increased PMS price accrue to the Federation," he said. "In the medium-term, the economy will then begin to benefit from increasing fiscal space for development spending, including on power and transport infrastructure, as well as on human capital."

The World Bank recommended Nigeria to control inflation, improve stability of the FX market, sustain savings from the PMS subsidy reform, improve non-oil revenues and remove trade barriers.

With continued implementation of economic reforms, Nigeria's economy is expected to grow at an average annual rate of 3.5% in 2023-2026, said Alex Sienaert, World Bank lead economist for Nigeria and co-author of the report.

"In 2024, Nigeria has an opportunity to turn the corner to a more stable and predictable macroeconomic environment, and easier access to foreign exchange and imported inputs, which is critical to creating new jobs and lifting people out of poverty," Sienaert added.

In October, Finance Minister Wale Edun said the federal government would receive a $3.5 billion loan from the World Bank for 40 years with a 10-year moratorium.

The World Bank shared in April that the naira lost 10.2% of its value due to a rise in food and fuel prices in the country following the subsidy removal.