‘Falling Oil Price Threatens Transformation Agenda’

Dr Peter Ozon-Eson, the Chief Economist of the Nigeria Labour Congress (NLC), yesterday said the drop in oil price at the international market may threaten President Goodluck Jonathan’s transformation agenda.

Ozon-Eson told newsmen  in Abuja that the falling price of oil might leave the administration with little revenue to fund projects relevant to the success of the state.

“If the international price were to crash, you will know that definitely the transformation agenda will be in trouble because, even this year, with the price of oil high, we have ended up with very little execution of capital projects.

“Going into the 2012 budget, it is clear that if the price of oil crashed substantially, we are going to have a revenue crisis and therefore, we would not, after meeting overheads and recurrent expenditure, find resources to plough into the development agenda.

“So, Transformation Agenda can only be achieved on the basis of true investment in capital projects.

“And since that is not happening and if that does not happen in 2012 as a result of the weakening of the international market for oil, then there would be a danger about the Transformation Agenda,’’ he said.

He however said that the situation might change in view of the fluctuation in the price of oil.

“We do know that recovery of the global economy and development in other aspects of the global economy would firm up the oil market, and the international oil price would be reasonably stable and high so that the budget can be salvaged,” he said.

He expressed regrets that Nigeria had continued to function with a mono-culture economy with oil revenue accounting for an unusually high proportion of the country’s total revenue and financing of expenditure.

According to Ozon-Eson, if oil prices fall below the benchmark price that is being anticipated, then the 2012 budget will be endangered.

He advised government to remove the linkage between domestic products and international prices of oil, adding that government’s planned removal of oil subsidy was dependent on the international price of crude oil.

“If the international price of crude oil were to double, then you will say that subsidy has increased. In the same way, if the naira were to depreciate substantially, we will say the subsidy has increased.

“ I think government needs to be advised that it needs to clearly accept the linkage between the domestic price and the international price,’’ he said.