LAGOS, 28 December 2003 — Nigeria has spent some $1.8 billion servicing its huge foreign debt this year, officials said yesterday.
Director-General of the Debt Management Office Mansur Mukhtar said the country’s foreign debt now stood at $30.9 billion, the bulk of which is owed to the Paris Club of creditor nations. He said around one trillion naira was also spent servicing domestic debts, and that $2.5 billion had been set aside to service external debts in 2004.
Mukhtar however regretted that rather than pay off the actual debts, Nigeria continued merely to service the principal loans. “Our debt is unsustainable. The paradox is that a lot of payment is going into servicing of interests and penalties,” he said. “We are not even talking of the principles so that the more we pay the more the stock increases,” he added. He urged creditor nations to show more understanding for Nigeria in its efforts to reduce its debt stocks. In the past year about ten European countries have signed debt rescheduling agreements with Nigeria.
Nigeria, Africa’s largest oil exporter - 1.018 million barrels per day - hopes to make more money from crude oil sales by pegging its 2004 budget on an average of $23 per barrel as against $18 in the current year.
President Olusegun Obasanjo said two weeks ago the country hopes to increase output to 2.34 million barrels per day of oil and condensate in the new year.
Oil accounts for more than 95 percent of the foreign exchange annual earnings in Nigeria, the fifth largest exporter in the Organization of Petroleum Exporting Countries, widely known as OPEC.
Meanwhile, three months into the deregulation of Nigeria’s downstream sector, the resurgence of long queues at gasoline stations across the country has exposed defects in a program eulogized by government as panacea for the perennial shortage of petroleum products. Last October, the government liberalized the sector, and gave permission to marketers of refined products to import and sell at unfettered prices. But as many motorists are unable to buy gasoline and some commuters are stranded this Christmas, Nigeria’s oil unions restated their opposition to the form of the deregulation. “Deregulation was not properly done,” said Louis Brown Ogbeifun, president of white-collar Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan. “That is why shortages are persisting,” Ogbeifun said in an interview with Dow Jones Newswires yesterday.