(4 minutes read)
- Ukraine’s crisis pushed oil prices above US$113 a barrel much to the delight of the petroleum producing countries
- But people in Nigeria-country that mines out highest quantum of crude -both from its offshore and onshore sources-in Africa does not have much to cheer
- Nigerians, despite their huge resources of oil, are staring at an oil crisis for curious reasons
- Perceptions differ on the impact of the Ukraine crisis on oil. According to President Muhammadu Buhari, Nigeria could ride on a boom on the back of recent oil price spiral
Ukraine’s crisis pushed oil prices above US$113 a barrel much to the delight of the petroleum producing countries. But people in Nigeria-country that mines out highest quantum of crude -both from its offshore and onshore sources-in Africa does not have much to cheer. Nigerians, despite their huge resources of oil, are staring at an oil crisis for curious reasons.
Perceptions differ on the impact of the Ukraine crisis on oil. According to President Muhammadu Buhari, Nigeria could ride on a boom on the back of the recent oil price spiral. But the man in the street does not share that optimism. They are forced to stay put at the serpentine queues for long hours before petrol pumps due to severe scarcity, particularly in metros like Lagos. The reason for the divergence of perception between the ruling and ruled class is that the higher revenue to the exchequer need not get translated into better well -being for the people.
Also Read:
https://trendsnafrica.com/oil-prices-at-record-level-north-sea-brent-at-us-113/
Nigeria is an oil dependent economy and revenue from it accounts for nearly 90% of the income of the country. But the country is paradoxically in the midst of a soaring price for oil, which analysts say highest in the last ten years, putting the citizenry in a quandary. The paradox owes its origin to the little refining capacity of the West African country-a full fledged member of the OPEC. It imports refined oil at higher prices and to enable the common man to access that, the government gives huge subsidies. That leads to higher budget spending, leaving little to be spent on capital heads, which can help create more employment and income to the people. Oil subsidy is considered to be one of the main reasons for many countries for the burgeoning non -productive expenditure in the country. Nigeria stands unique in the category of states spending on subsidies since it is one of the largest producers of oil in the world and the top producer in the continent.
Also read:
https://trendsnafrica.com/nigerias-gdp-registers-unexpected-growth/
A litre of gasoline costs an average of 165 naira (40 US cents), whereas in the black market, this week, it was fetching between 350 to 500 naira. That led to adulteration on a large scale. Now, the government has pumped out the adulterated oil from the market. That has helped the petrol users to insulate the vehicles damages, but led to a huge shortfall in the market.
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https://trendsnafrica.com/eu-to-support-nigerias-digital-economy/
Despite the assurances by the government that the situation would be normalized very soon, the citizens are keeping their fingers crossed. Indeed, the country is taking concrete steps towards making available oil in large quantities both for domestic uses and exports. It has tweaked the foreign investment rules to facilitate more foreign companies to come and invest. But, it appears that it may take a longer time to fructify the investments since cross-country investments have yet to bounce back from the pandemic blues.
Nigeria’s 1.4 million barrels per day oil output comes from off-shore, where the revenue realization of the government is limited to 20 to 30 percent. To address this problem and to comply with the IMF/World Bank stipulations to adhere to before contracting the loan, Nigeria’s finance minister last year suggested the costly fuel subsidy programme would end in June. But the plan was put on hold since it was not a popular decision that people would welcome.
