The subsidies cost the government N1 trillion ($6.6 billion) in 2009, said the Central Bank Governor Lamido Sanusi in June.
And the nation imports more than 80 percent of its refined fuel to meet local demand due to a lack of adequate refining capacity, according to the country’s petroleum ministry."
In three to four years’ time, Nigeria will be a different country," Aganga said in an interview in London, yesterday. He added: "We have a great story. The numbers tell you that."
Importantly too, Aganga said that the Federal Government plans to put $1 billion into the SWF when it kicks off next month, just as he noted that the nation is targeting 10 percent economic growth by creating an oil-financed infrastructure fund while pushing for foreign investment in the power industry as it backs off fuel subsidies that have drained the national purse..
"Today, we have a government that is committed to encouraging investment and also ready to deliver infrastructure, he said."
Power outages are a daily occurrence in Nigeria, where demand for electricity almost triples the current supply of 3,000 megawatts. Nigeria, Africa’s second-largest economy after South Africa, has a population of about 140 million.
Boosting growth to a minimum of 10 percent in coming years is "achievable" as investment in infrastructure climbs, Aganga said. The economy expanded 7.4 percent in the first half of the year, compared with 5.9 percent in the same period last year, driven by growth in the non-oil industries, he said.
The SWF will replace the Excess Crude Oil Account, which the government has often used to finance expenditure, Aganga said.
Part of the new fund will be dedicated to savings that the government can’t touch unless oil prices plummet, while most will finance infrastructure projects, he said.
The Excess Crude Oil Account should reach about $1 billion by the end of the year, from between $500 million and $800 million currently, Aganga said. That will be transferred to SWF and act "as a catalyst for both local and international investors," he said.
A third part of the sovereign wealth fund will be a stability fund, which will be similar to the current Excess Crude account, though harder for the government to access, Aganga said.
Already, Nigeria has received interest from investors for a proposed $500 million Eurobond, which the government will sell in October or November, according to Aganga. Investors have asked the Federal Government to increase the size of the bond, while the government has appointed advisers for the bond sale, he said.
The Federal Government believes that the sale of Nigeria’s first Eurobond will act as a benchmark, so that companies can price their bonds accordingly, Aganga said. The government has already selected advisers for the sale and is in the process of appointing book runners, he said.
Foreign investor interest in the planned Eurobond has been strong, with some investors asking Nigeria to increase the size to $1 billion, Aganga said.
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