• Sunday, June 23, 2024
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‘Russia-Ukraine war may threaten Ajaokuta steel plant’

Revisiting Ajaokuta

The conflict between Russia and Ukraine may cause a major setback to the agreement on the resuscitation of Nigeria’s Ajaokuta Steel Plant by the Russians, the Centre for the Promotion of Private Enterprise (CPPE) has said.

The economic and business advocacy think-tank noted in a statement on Tuesday that bilateral discussions between the federal government and the Russian government on the resuscitation of the plant had progressed significantly before the pandemic disruption.

“This conflict may cause a major setback to this agreement because of the torrent of sanctions against Russia,” Muda Yusuf, chief executive officer of CPPE, said.

According to him, the Russian invasion of Ukraine has profound and multidimensional implications for the Nigerian economy, especially if it gets protracted.

Read also: EXPLAINER: Why Ukraine is popular destination for Nigerian students

He said, “These include the escalation of energy prices (diesel, aviation fuel, kerosene and gas), mounting petrol import and subsidy bill and the aggravation of petrol smuggling.

“There are also significant macroeconomic outcomes, which include heightening fiscal deficit, growing debt levels, spike in debt service payments, money supply growth, exchange rate depreciation and more intense inflationary pressures.”

Muda added, “We will see an upsurge in petrol import and subsidy bills in coming months as the landing cost of petrol increases on the back of the rise in crude oil price. Regrettably, we remain a major importer of petroleum products and typically when oil prices increase, petrol import bill and subsidy payment also increase.

“Only recently the NNPC made a request of N3vtrillion for petrol subsidy. With the current turn of events, the subsidy bill would even be higher, creating a serious fiscal challenge for the government at all levels. These of course have serious implications for the budget and government finances.”