Rising crude oil prices, fuel subsidy tighten grip on government spending

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The rising international crude oil prices and the sustenance of fuel subsidy is putting finances of the Federal Government (FG) and the states, including the Federal Capital Territory in dire strait.

On one hand, the Nigerian National Petroleum Corporation (NNPC) has put the Accountant General of the Federation (AGF) on notice that, it will not be able to remit the usual remittance to the Federal Accounts Allocation Committee (FAAC).

On the second hand, while the rising of crude oil prices would appear a blessing to the country, its spill over effect of the prices of petroleum products means, the NNPC will have to spend more money subsidizing petrol.

The bottom line is that, the amount of money shared among the three tiers of government will further reduce with NNPC saying there will zero remittance for the month of May.

The ugly situation have been the subject of discussion, with the Governor of Edo state, Godwin Obaseki saying the Central Bank of Nigeria (CBN) printed N60 billion to pad the amount shared by the tiers of government. Of course, Zainab Ahmed, the Finance Minister denied it.

In March, Mele Kyari, group managing director (GMD) of the Nigerian National Petroleum Corporation (NNPC), had warned that the corporation can no longer bear the burden of underpriced sales of premium motor spirit (PMS), better known as petrol, to consumers in the country.

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