Nigeria’s well documented issues with oil and gas epitomizes the African proverb that ‘’Procrastination are the graves upon which opportunities are based. Considering the fact that oil discovery, exploration and trade has been in existence since the 1950, it would not be wrong to state that Nigeria had been digging mass graves all the while.
The recent comments by Mele Kyari, Group Managing Director of NNPC on the decision of the corporation to remove government subsidies on the prices of its Petroleum products must have sounded like a gong from a distance: It should have been done earlier than now. Of course, this is coming on the back of the sharp drop in oil prices, attributed to the COVID -19 Coronavirus pandemic and then the oil trade dispute between Saudi Arabia and Russia and its impact on OPEC’ s benchmark pricing. Of course, there have already been predictions of a further drop in oil prices to possibly a single digit figure per barrel (which in all honesty, is damning for a country that rakes in 86% of its export earnings from this source).
As OPEC members deliberates on historic production cuts (which might go well into 20 million barrels per day) and the world’s demand falls as economies try to rebuild from the impact of the COVID 19 pandemic, Nigeria is left in a state of acute economic spiral. Already, major cuts to the 2020 national budget are already being made and this has put on hold the development of certain sectors of the economy.
Should we really have been in this situation?
Nigeria’s Oil production from 1980 to date has never been below 500 million barrels per day. In fact, as early as 2012, we were producing roughly 2.7 billion barrels per day, eclipsing Angola and Kuwait at some point. Revenues from oil exports have raked in billions of Dollars over the year (with consideration on oil price changes). Economic and political analysts have touted the need for a diversification on the country’s export sectors by encouraging new viable sectors and engaging in the formation and management of some. Over the years, some of those establishments have either been abandoned or left moribund. Local Oil refineries built have often been drawn into the mix, leaving the country’s wealth at the mercy of multinational firms that are more patriotic than a blind man hoping to not hit a basket in the marketplace. In a bid to cushion the effect of oil shocks, the government had subsidized the prices of fuel over the years.
The New Year resolution of the Good luck Jonathan government in 2012 to remove oil subsidy was greeted with mass protests. Of course, an increased petrol price was one worry: proper accountability of subsidy funds was a worry that was never worried about… only until recently. While fears over increased petrol prices can be assuaged with the hope of a privatized oil refinery by Aliko Dangote, the same cannot be said over how oil prices might just affect the growth of other sectors that we failed to improve. For a Nigerian micro economy that is highly emotional, ordinary fuel price increases can trigger a massive inflation in basic commodities: dragging us back into a new need for righting the wrongs that have long been closed.
Our mass graves might have been dug for years on end but the country can close them up: doubling efforts on improving other viable export options and remembering that subsidy was never a palliative, but a mirage that continually plays its macabre dance of hope before our eyes.
Until then however, we would never need the graves if opportunities are kept alive!