LAGOS – Some oil and gas experts have expressed worries over the sustained slide in the international price of crude oil price on the Nigerian economy.
Their worries were heightened by the Federal Government’s earlier benchmarking of the 2015 budget on 65 dollars per barrel.
Mr Oluwaseyi Gambo, former Public Relations Officer, Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), said in Lagos that the benchmarking posed a serious challenge to the country’s economy.
Gambo said strong indications that crude oil prices might drop below the current price of about 62 dollars per barrel made it imperative for government to embark on aggressive diversification of its revenue base.
“Time has come for government to diversify its revenue base from oil. The 65 dollars per barrel benchmark is dangerous for the nation,’’ he said.
Mr Edwin Nwachukwu, Operations/ Engineering Manager, Frazimex Engineering Ltd., Port Harcourt, said that contrary to other opinions, there were signs of further depreciation of oil price dropping beyond the 2015 budget benchmark.
Nwachukwu also said the overall economic scenario was that the budget would require high level borrowing to be funded effectively and meet its set objectives.
“The government is advised to seek alternative means of funding capital budgets like BOT for gas/power infrastructure developmental projects that will engender economic diversification from oil.
“Furthermore, measures should be put in place to reduce the recurrent expenditures, especially cost of governance and personnel remunerations,” he said.
Mr Makinde Adekunle, a former President, Nigerian Institution of Electrical Electronics Engineers (NIEEE), said that the ongoing crash in the oil and gas sector clearly indicated that government should diversify the economy.
Adekunle said that the recent devaluation of the Naira and austerity measures introduced by government were at variance with the intent of 2015 budget.
He said that it was wrong for government to further impoverish Nigerians in the midst of global economic turbulence with additional burdens through marginal taxes.
“Government should rather pursue aggressive policies that would cut cost and reduce corruption.
“With the current crude oil price it doesn’t look realistic, when benchmarking is seven dollras above current sale price, it’s already under water,” he said.
Mr Mike Osatuyi, Director of Operations, Independent Petroleum Marketers Association of Nigeria (IPMAN), urged government to deregulate the downstream of the petroleum sub-sector following the dwindling global crude oil prices.
Osatuyi said that government should put in place adequate measures to cushion the effects of the deregulation and protect the masses from the brunt of the system.
According to him, the best time for the deregulation of the downstream sub-sector of the nation’s oil and gas sector is now that the crude oil price is experiencing a downward trend.
“Deregulation could have been the best automatic price adjustment mechanism that responds to the market forces without any need for intervention by the government.
“Just as the price of crude oil is dropping and some countries, such as United States of America (USA), adjusted the price of petrol from three dollars to two dollars.
“The price mechanism in Nigeria should also be able to adjust to a reduction in the prices of refined products (petrol, diesel and kerosene),” he said.
Osatuyi said that the only criterion for deregulation was that the government should take measures that cushion its effects on the citizenry.
He said that government needed to work on the effective and efficient implementation of the means of mass transportation, especially the rail system, and provide efficient and uninterrupted power nationwide.