Bismarck Rewane, managing director, Financial Derivatives Company (FDC) Limited, says the devaluation of the naira will push fuel subsidy to N7.1 billion per day.
The adoption, a move to unify the country’s forex (FX) rates, weakened the naira against the dollar by 8 percent to N410.25/$1.
Rewane, in an economic report released over the weekend, said that with the rise in local consumption of petrol, subsidy payment could rise.
He explained that with the rise in local consumption from 57.8 million in 2020 to 93 million litres – about 60.9 percent increase, subsidy payments could rise to N7.1 billion daily from N5.5 billion in June.
The report argued that this was due primarily to the rally in global oil prices, at $76 per barrel and currency adjustment of between N410 and N411 at the investors and exporters window (I&E rate) from the previous N379/$, leading to an increase in landing costs for imported refined products.