As Oil Hits $35 Nigeria Faces Most Trying Economic Times
by Dr. Peregrino Brimah
The global price of oil hit a record low since the 2009 recession dip. Settling at $35 last week, Nigeria is earning about a quarter what it did in the past five years, and the forecast remains bleak. Oil may well go to or below $20/barrel by 2016 according to several analysts.
Oil remains Nigeria’s virtually only export and source of capital to sustain its economy, with the government running 75% on oil revenue. The nation sells over two million barrels a day, this translates to prior foreign sales of almost a quarter of a billion dollars daily and about 80 billion dollars yearly. Production cost, transport and trade leaves the nation with under $60 billion/year. At the current rate, the nation sells about $70 million in oil daily to a total of $25 billion a year. Nigeria will make under $20 billion dollars yearly at the current oil rate after production and other export and trade costs.
No Cushion Following Past Era Of Corruption And Waste
Nigeria used to lose much of the billions it earns via illicit trades and government corruption, and yet be able to put about half of what was left, about $27 billion towards its budget and another half to settling its foreign debts which continued to triple under the immediate previous Goodluck Jonathan administration. The past couple of years was a period where Nigeria earned so much it should have built a solid Sovereign Wealth Fund (SWF) that would shore it over several years of drought; it didn’t. The nation did not develop a single infrastructure with the billions in oil income and relied on crippling foreign loans to build some roads, airports and fight terror. Rather than build and save with the massive earnings, the former administration only built the little it did on new debts while squandering virtually all of the earnings.
It is important to mention that Nigeria actually drills perhaps double the 2 million barrels on record as being sold daily; the cabal run black market thieves and traders and the entire illegal exploration enterprise drill and sell as much as the nation does. Additionally some oil bloc owners like Africa’s richest woman, were gifted their blocs and pocket their entire earnings giving Nigeria nothing, according to the unbelievable deals our leaders gave them.
“Corruption In Nigeria Leaves 76% Of Crude Oil Revenue Unaccounted For,” former Central Bank Governor, Emir Sanusi Lamido Sanusi said as carried in the International Business Times. This is a time when the nation cannot afford for a dime or a drop of oil to go missing or be wasted.
If oil prices stay at the current level or fall further, Nigeria cannot service the loans it inherited, talk-less pay salaries and run the state. The survival of Nigeria precariously depends on the most steady hands and most stringent means.
Headed For $20
It is important to mention that “the oil market is really just based on assumptions, which get put into models that spit out probabilities.” The rate at which oil has sold for the longest has no basis in reality or moral codes of trade but was only at high levels because of capitalistic, futures trade market principles. And now as the Lord warned when telling us to stay away from markets based on assumptions, speculations (gambling) and profiteering, the price has crashed.
As US introduced its new methods of exploration, ‘fracking,’ and doubled its oil production to today become the world’s leading oil producer; the check by OPEC to discourage US oil production investment was to slash oil prices. Some say the intentional devaluation was also an economic tactic against Russia, but the precise total reasons is not so important, what is, is that oil prices have suffered and been deliberately sent crashing and this is ongoing.
Water is Much More Expensive Than Oil
At the current going rates, a barrel of oil is 65% cheaper than a barrel of Evian pure water. Imagine! They say the wars of the day are being fought over water and not oil. They say the West sacked Gaddafi because of his “Great manmade river,” Nubian Sandstone Aquifer project that threatened to lead the supply of drinkable water to north Africa and Europe. It is easy to believe. Oil is being made useless…by the senselessness of capitalist market forces or on purpose by the NWO, ether way, it is. We must adjust to new realities or we die.
Earnings from Nigeria’s parastatals provides some substantiative income. Customs and the Ports earn over a billion dollars yearly. During the Jonathan era, these agencies swallowed the entire earnings–all that money you and I pay them when we import cars– and they only gave the Federation a tiny fraction as it pleased them. Today with the TSA, Nigeria can rack up billions of Naira for government running costs and only give these agencies their bare running cost, allowing them starve as and when we do. So far the reforms on that aspect are on point, bar cabal companies swallowing percentages for transactions.
Nigeria must also completely stop all illegal oil exploration and bunkering. This can potentially double the nation’s oil output. On the topic, all past administration oil bloc allocations must be reviewed by anti-corruption agencies with many of the allocations being revoked in the nation’s interest. A Public-private oil bloc ownership platform should be instituted for future oil bloc allocations. It is time to end the Cabal hold on the government and give power and opportunity to the nation and the people as obtains in the UAE, part owners of all their ventures like Emirates, Etisalat and the like as I wrote about. Just as a pointer, the UAE SWF is about a Trillion dollars!
Restoring agriculture in the north east and diversifying the economy cannot be overstated. Development of the SME sector, the leading global employer can also not be over emphasized. Nigeria must produce and export to neighboring African nations.
Cost of governance must be cut. It is no joke, we need to scrap the redundant Senate to cut overhead. One House working part time is more than enough. Most countries in the world are Unicameral. Today the Senate is not just meaningless but it has largely constituted a dangerous nuisance in the running of the nation. Ministries and state governments must be watched for exorbitant contracts. $400 Boreholes must never be built at $450,000 a piece. Nigeria must be run with commonsense, responsibility, and empathy.
In conclusion, it is time to tighten your belts, fellow countrymen, we find ourselves in a complex capitalist storm and we were left in a thatch building.