The global crude oil prices last week edged up to over $71 per barrel since 2014 giving an increased hope for more increase in the price of the commodity which had sometime nosedived.
The development was among other things due to weaker United States dollar, tighter global supplies and a record run of declines in US crude inventories, output cuts by the Organization of Petroleum Exporting Countries (OPEC) and Russia, worldwide economic growth and a series of global events that have ignited geopolitical tension.
To Nigeria, one of the OPEC members, whose economy was severely affected as a result of drop in the price of crude oilsome months back, the rebounce in the cost of the commodity is no doubt opportunity to redeem all it lost during the period when the price of crude oil was unfavourable to the country.
Already, the Governor of Central Bank of Nigeria, Godwin Emefiele, said Nigeria could build its reserves to $60bn in the next 12 to 18 months, from $40bn currently, if there is no tamper on the upward movement in the price of the commodity.
Besides, President Muhammadu Buhari has said that income accruing to the country from rising oil prices in the international market will be spent on the development of infrastructure.
He added that the extra funds outside the provision of 2018 budget which was predicated on $47 per barrel will be deployed to infrastructure projects like roads, rail, and power for the good of the country.
Mrs. Kemi Adeosun, the Minister of Finance, has said the country is learning to ignore crude oil prices,’’ We’ve got to a point where we don’t care,” whether oil prices will be sustained at the level that they have recently risen to. We’ve been able to balance our budget at $45-$46 per barrel and we’ve got to learn to live comfortably at that level,”
But, stakeholders in the nation’s oil and gas sector have expressed mixed feelings over the supposed impacts the rising crude oil prices would have on the nation’s economy.
Mr. Henry Boyo, a famous economist said the popular expectation that increasingly bountiful oil revenue will assuage our economic distress may not actually stand up to scrutiny.
He recalled that even when oil price approached $150/barrel, with a dollar reserve windfall above $60bn, more Nigerians inexplicably joined the ranks of the poor with a subsistence income of less than $2/day!
He added that until the current misguided system of infusing export dollar revenue into the system is stopped, it would be better for Nigerians to pray that oil prices do not rise to enhance our export earnings.
The President of the Nigerian Association for Energy Economics (NAEE) Professor Wumi Iledare, was of the opinion that the rising oil price was good for Nigeria on one hand in the realm of meeting budget expectations for 2018.
According to him, the development provides opportunity to have savings since the price is significantly higher than the budget, adding that it would also enable the government to increase the external reserves as well as strengthen the dollars.
He, however, expressed doubt that the country and its handlers would be able to abide by the golden rule because Nigeria is almost in the elections era.
A one-time presidential aspirant, Engr.Martin Onovo, told INDEPENDENT that the current government lacks the capacity to manage the dividends that would come out of the increasing crude oil prices at the international market.
According to him, Nigerians should not expect much from the government that cannot effectively manage the economy to add value to their lives.
Director, Mother Earth Foundation,Nnimmo Bassey, told INDEPENDENT, that the positive thing about the rise of oil price is that government will have more money to spend.
He also said the downside is that the nation maybe lucked into thinking that oil could remain a major income earner into the future, adding that the lower oil price stimulated some thoughts towards a diversified or even a post oil economy.
He added that oil price increase has a potential of building false hope and leaving the nation unprepared for the inevitable fading out of petroleum driven civilization.
According to him, the other worrying aspect of the increasing oil price has been illustrated by government’s plan to utilize $1billion of the so-called “excess crude” funds in fighting the already defeated Boko Haram insurgents.
‘’Fighting terrorism is a task that government must carry out. Yes. But looking at extra funds coming in on account of increased oil price as “excess crude” funds is the wrong mode of thinking that plagued previous administrations and some of us expected this administration to rise above that mindset.
‘’We have a sovereign wealth fund that probably hovers around $1bn. There is no reason why additional income should be plowed into that savings account for use for critical projects or social investments and for the benefit of future generations.
‘’The funds should be set aside for the cleanup of the highly polluted Niger Delta. Another way to utilise such funds would be in research and development of renewable energy sources. We recall how governors scrambled and insisted on sharing whatever extra funds came in by reason of risen oil prices. Where did that lead us? Unless the nation saves the additional funds that come in through rising oil prices we will find that hands will go into the pot and into some bottomless black holes such as are provided by investment in militarization and warfare’’.
Mr. Shina Amoo,the Chairman, Independent Petroleum Marketers Association of Nigeria, Ore Depot, said the rising cost of crude is a mixed blessing for Nigeria.
He said Nigeria will fritter away the gains of the crude oil increase if it persists with huge importation of refined products.
He however said the reverse would be the case if Nigeria exports more crude refine crude oil for our local consumption and export refined products to other countries. That is the time we can maximise the opportunities presented by this situation.
Dr. Timothy Okon,the Chief Executive Officer (CEO) of the International Institute for Petroleum, Energy Law and Policy (IIPELP),said the increase incrude oil prices would add value to the nation’s economy.
According to him, the country needs fiscal discipline to be able to realize the full advantage of the change in crude oil prices at the international market.
Otunba Yomi Ogunnusi Former Deputy Chairman, House Committee on Finance, said if the oil price is increasing and Nigeria can use it more judiciously domestically to reduce its local debts.
He, however, said it is not the best option for the country if the oil price is increasing and ‘’we are just saying that we are having more money in our reserves when we keep borrowing money.
‘’When oil price increases, we are supposed to have more money but the problem is that most of this money, when the benchmark is low, goes into the ECA which is managed abroad and has no serious audit control. Then, we will be borrowing more money locally while we say we are keeping money. Some can argue that if we have more money in our foreign reserves, it will help our image and the value of the naira which is fine. But our priority now should be how can we resolve our problem locally and make more money available locally and stop borrowing?’’
Prof. Sheriffdeen Tella ,a university don, said the increasing price of crude oil has both bad and good values for the country.
He explained that the development is because it can give us some false sense of financial security such that the easy does not shift attention away from the efforts to diversify our sources of revenue.
According to him, it is good because the country needs money now to reduce borrowing to finance annual budgets and make investments in economic growth and employment enhancing ventures that will take us fully out of recession.
‘’This is because the present low level of growth does not guarantee escape from sliding back into recession. More importantly, the money should be used to finance capital projects like power and road/rail infrastructure rather than financing the foreign exchange market as the Central Bank Nigeria is currently doing’’.
Former South West Chairman of PENGASSAN, Comrade Foluso Oginni, told INDEPENDENT that in as much as the current price regime of crude oil at the international market would have benefitted Nigeria, lack of clear cut policies in the nation’s oil and gas regime would erode it.
Above all, stakeholders are of the opinion that the increase in the crude oil prices is a blessing to Nigeria and that the government should up its game with a view to ensuring that the dividends therein are judiciously used to better the lots of Nigerians.
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