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Oil Price Fall And Nigeria’s Economy

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At the 7th All Nigeria
Guild of Editors conference held in Benin, the Edo State capital on Thursday, September 22, 2011, the former minister of the Federal Capital Territory, Mallam Nasir el-Rufai, raised alarm that should oil  price drop below $80 per barrel in the international market, some state governments in Nigeria would not be able to pay salaries to their workers.
El-Rufai, who was speaking on the topic, “Perspectives on the Cost of Governance in Nigeria”, had strongly noted that pegging of oil price as high as $75 then in the national budget was unrealistic and not good for Nigeria’s economy.
The minister was being as prophetic as many individuals and organizations who believed that the nation’s economy which is oil dominated would be in a quagmire, should any unforeseen surprises affect the oil price in the global market.
Various experts had also, for too long been consistent in expressing strong need for drastic reduction in the high cost of Nigerian governance which gulps as high as 25% of the annual budget and one of the highest in the world.
They had equally suggested diversification of the economy from oil to other sectors particularly agriculture which hold high promises for food on the table of the average Nigerian, mass employment, raw material for industrialization and foreign exchange earning.
While most nations of the world had strategized to contain such possible economic fears, most African governments also took bold steps in preparations for the economic uncertainties, but some deaf-and-dumb governments had preferred what goes directly into the individual pockets of the leaders than the general good of the citizens. Billions of Dollars meant for constituency funds, furniture extravagant travelling allowances, amongst others find their ways to the law makers and their crowd of primal aides.
Today, the reality is not only knocking at our doors but is quite here with us. The present systematic drop in the oil price which experts predict could slide far below $50 per barrel benchmark before the end of 2015 has become Nigeria’s undoing.
Many state governments in Nigeria today are owing months of salaries arrears to their workers while contractors have abandoned projects execution because the oil price then predicted had fallen below budgetary calculations and states lack the funds to pay.
Some private schools in Port Harcourt have already given notice of increase in school fees, landlords are also threatening to raise rent, labour unions are ironically agitating for pay rise in view of recent devaluation of Naira occasioned by dramatic drop of oil price in global market even as state governments insist they would not review the $65 per barrel benchmark on which they proposed their 2015 budgets. Where would these excoriations take the nation to in the present economic situation determined by global economic reality?
An economist, George Clement, is of the view that time has come for Nigeria to elect leaders who have the capacity to proffer solutions to the socio-economic challenges confronting the nation as against empty promises for which most Nigerian political leaders are known.
“The era of touts aspiring for public offices should be over. It is time to look beyond sweet talks and empty promises now that campaign period in Nigeria is around the corner”, said Clement.
He said, “our leaders had since the oil boom of the 70s refused to do the right thing. Billions of Naira had consistently been swallowed up by the pockets of fraudulent leaders”, he remarked noting that the future generations may have nothing to be proud of about their nation if the real change is not effected.
Another respondent, Mrs Mary Jonathan, in her own reaction is challenging the Economic and Financial Crimes Commission (EFCC) to trace the loots of the nation wherever they might have been hidden.
“Yes, it  appears late but not too late. We cannot continue to wallow in poverty in a rich country while few persons in the name of politics continue to cart away our resources”, she stressed.
Jonathan appealed to the Federal Government to review the pump price downward to reflect the price of oil in the global market. “We cannot afford to pay more when actually the price has fallen. The N97 per litre of fuel is no longer realistic”, she maintained.
A civil servant, Makel Ndah, in his own reaction called for upward review of workers salary. “Since the Naira has been devalued, its exchange power has become weak, it is important that the government reviews workers salary upward to meet with the current market reality”.
A landlord in Port Harcourt Chief Clifford Nweke, said,” it is obvious that house rent would be reviewed since government has started to have a second look at the Naira.”
We are all Nigeirans, operating in the same market, so what affects one should equally affect the other. Yes some people will say landlords are wicked shylocks, but that is mere sentiment”, he maintained.
A private school proprietor who pleaded anonymity said, “we had our first Parent Teachers Meeting last week and the issue of increase of salaries was raised by the teachers and I told the parents to pray and watch because for me to pay higher workers salary means that the fees charged students would also be reviewed upward.
“Please don’t get me wrong, we have not increased school fees yet. What I am saying is that we in my school are studying the socio-economic variables. If workers salary goes up and other schools readjust to meet with the reality, we here would also adjust because we are part of the society”, he explained.
A Port Harcourt- based public analyst, Christian Nnamdi, said the issue calls for caution. “There is no need to panic yet. It is not a Nigerian thing but a global phenomenon. It does not affect only Nigeria but other nations of the world. Nigeria has many antidotes to the problem. So all we need to do is study the situation to know the dynamic nature of the change.
According to Nnamdi, the nation should not leave everything in the hands of politicians. “We need to protect the economy from the excesses of selfish Nigerian politicians and one way of doing that is to gather together some technocrats and experts in various fields especially economists. Let the think- tank develop an economic plan that should guide the policies and programmes.
Call it 25 years economic development plan. So that whichever political group that takes the mantle of leadership, will have to build whatever programme from the economic blue print.
Nnamdi blamed the woe of the nation on inconsistency of leadership, stressing that government should be seen as a continuation from where the former ends. “But you see, in Nigeria, any new administration is in the habit of abandoning the programmes of the previous administration at the detriment of so much fund sunk into such projects because they want to take credit.
“But with a long term economic development plan, new government can no longer abandon projects started by the former government. It has to inherit it and complete it for the people. This idea will make nonsense of the penchant for second term which is common in Nigeria,” he maintained.
It would be recalled that discovery of shale oil which increase supply in American oil market, a major importer of Nigeria’s oil has affected the oil supply in the global market. This high supply has reduced oil price in the global market and Nigeria, whose economy remains oil-driven is directly affected.
Nigeria whose budget depends on oil has been forced to review its oil benchmark resulting in austerity measures to contain the economic downturn.
Medium Term Expenditure framework which the Finance Minister, Dr. Ngozi Okonjo-Iweala, submitted to the National Assembly, scaled down the nation’s budgetary estimate for 2015 to N4.661 trillion as against an initial N4.817 trillion.

 

Chris Oluoh

Some Transformers donated by the lawmaker representing Oyigbo in the RSHA Hon. Okechukwu .A. Nwuogu

Some Transformers donated by the lawmaker representing Oyigbo in the RSHA Hon. Okechukwu .A. Nwuogu

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Rivers PETROAN Elects 12-Member Executive 

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The Petroleum Products Retail Owners Association of Nigeria (PETROAN), Rivers State Branch, has elected a 12 – member executive to steer the affairs of the association for the next four years.
The executive, elected during the Annual General Meeting (AGM) of the association, at it’s secretariat in Port Harcourt, and sworn in immediately after the election, was mandated to, among other things, tackle the adulteration of petroleum products as well as address irregularities in meter readings across the state.
The newly elected executive include, Pastor Ezekiel I. Eletuo  as  Chairman,  Kanu Addeson C. as Vice Chairman , Dr. Ejike Jonathan Nnbuihe as Secretary,  Fidelis A.Inaku as Treasurer and Lady C. N. Ekejiuba as Financial Secretary.
Others are Anaenye Anthony as Publicity Secretary, Arc. Kingsley O. Anyino as Organising Secretary, Nze Peter Ezenwa as Chief Whip, and Sunny Williams as Auditor.
Other members of the executive included Chidiebere Ronel Akwara as Welfare Officer, Ibe Chimaobi C. as Legal Adviser, and Emetoh Chizoba as Assistant Secretary.
Inaugurating the new leadership, PETROAN Zonal Chairman, High Chief Sunny G. Nkpe, charged the team to build on the achievements of the outgoing executive.
He urged them to collaborate with stakeholders in the petroleum sector to ensure industry stability and address issues of multiple taxation.
Nkpe who emphasized the need for transparency, accountability, and an open-door policy in administering the union, insisted these principles remained crucial in advancing the association’s objectives and improving members’ welfare.
The zonal chairman also commended the outgoing executive for their accomplishments during their tenure and for conducting a smooth transition process.
He further described their efforts as instrumental in strengthening the union’s standing in the state.
In his acceptance speech, the new Chairman, Pastor Ezekiel I. Eletuo, thanked members for their confidence and pledged to improve on the foundations laid by the previous administration.
He promised his leadership would be guided by transparency, accountability, fairness, unity, and integrity.
Eletuo called on all members to support the new executive in its efforts to elevate the association.
Also speaking, the immediate past Chairman, of the association, Sir Chilam Francis Dimkpa, expressed appreciation to members for their support during his administration and stressed the need for them to extend the same cooperation to the new leadership.
Dimkpa highlighted key achievements of his tenure to include capacity building for members, increased union visibility through media advocacy, and the establishment of stronger ties with stakeholders, corporate organisations, and individuals.
He also acknowledged the support of the state government, the Police, the Department of State Services (DSS) and the Nigeria Security and Civil Defence Corps (NSCDC).
Stakeholders present at the event also delivered their goodwill messages.
Highlights of the event included  administration of oath of office to the new executive and the presentation of certificates of return by the zonal chairman.    .
By: Amadi Akujobi
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FG Intensifies Efforts To Reposition Tourism Sector 

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The Federal Government has intensified efforts towards reposition Nigeria’s hospitality and tourism industry for global competitiveness, aimed at strengthening regulation, professionalism and workforce standards across the sector.
This was made known last week when the National Institute for Hospitality and Tourism (NIHOTOUR) conferred  fellowships, inducted professionals and inaugurated the governing boards of the Hospitality and Tourism Sector Skills Council of Nigeria (HTSSCN) in Abuja.
The high-profile event, held at Merit House, Maitama, drew senior government officials, regulators, tourism operators, cultural institutions, hospitality investors and development partners in what stakeholders described as a major institutional shift .
Government also formally inducted registered practitioners into various professional categories while also inaugurating the Board of Trustees and Board of Directors of the HTSSCN, an employer-led platform designed to align workforce competencies with industry expectations.
Speaking at the event, the Minister of Art, Culture, Tourism and the Creative Economy, Hannatu Musa Musawa, said the initiative represented a strategic intervention to strengthen accountability, standards and institutional coordination within Nigeria’s tourism and hospitality ecosystem.
According to the minister, Nigeria’s vast cultural assets, tourism destinations and creative talents can only translate into sustainable economic value through professionalism, regulation and globally accepted operational standards.
She noted that tourism and hospitality industry remains one of the fastest-growing sectors globally, contributing significantly to employment generation, foreign exchange earnings and cultural diplomacy.
Musawa explained  that NIHOTOUR Establishment Act has expanded the institute’s mandate beyond training, positioning it as a regulatory and certification authority for hospitality, tourism and travel practitioners in the country.
“No sector can attain sustainable growth without structure, standards, institutional coordination and skilled professionals,” she said, stressing the need for stronger collaboration between government agencies, operators, training institutions and private sector stakeholders.
In his keynote address, the Director-General and Chief Executive Officer of NIHOTOUR, Abisoye Fagade, described the event as a historic turning point in the formalisation of Nigeria’s tourism and hospitality industry.
Fagade said the induction of practitioners, conferment of fellowships and inauguration of the HTSSCN governing boards marked the beginning of a new era of institutional governance, professional recognition and sector-wide coordination.
“Regulation and standardisation are no longer optional; they are economic necessities if Nigeria truly intends to compete globally,” he stated.
By:  Nkpemenyie Mcdominic, Lagos
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Big Oil Reconsiders Previously Unattractive Destinations

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The Middle Eastern crisis has prompted a reprioritization among international oil companies. Previously unattractive drilling destinations are suddenly looking quite attractive—even Alaska.
The oldest oil and gas producing part of the United States has for years been out of the spotlight as the industry moves to cheaper and faster-growing locations. The only news of any substance about Alaska recently was the Biden administration’s approval of the Willow project, led by ConocoPhillips, which was set to boost the state’s oil output by 160,000 barrels daily, and Australian Santos’ Pikka project, set to start commercial production this year. That was years ago. Now, Big Oil is eager to drill in Alaska.
Earlier this month, a lease sale in the National Petroleum Reserve in Alaska attracted record bids, worth a total $163 million. Among the bidders were Exxon, Shell, and Repsol, with the latter already partnering with Santos on the Pikka development. And this may be just the beginning.
Related: Saudi Aramco Looks to Raise $10 Billion from Real Estate Asset Deal
The Bureau of Land Management offered 625 tracts across about 5.5 million acres for bid in the sale, revived at the end of last year by the Trump administration. No lease sales were held in the National Petroleum Reserve in Alaska under President Biden. Yet under Trump’s One Big Beautiful Bill, there will be a total of five lease sales in Alaska over the next ten years.
“With the imminent start-up of the Pikka project on the North Slope, the reversal in the decline of oil production in the great state of Alaska is going to help put more oil in the Pacific area at an important moment,” Repsol’s head of upstream operations, Francisco Gea, said as quoted by the Financial Times. Gea called Alaska “a fantastic opportunity”. The Pikka project, which has a price tag of $4.5 billion, will produce up to 80,000 barrels daily.
It is indeed a fantastic opportunity, at the very least because it is nowhere near the Middle East and as such is a highly secure energy exploration destination. Canada is in a similar position, by the way: the head of the International Energy Agency earlier this month told an industry event Canada had a golden opportunity to step in as a secure energy supplier in a world that’s currently 14 million barrels daily short on supply because of the Middle Eastern crisis.
Security, then, is what has prompted Big Oil to return to the North—even Shell, which left in 2015 after writing off as much as $7 billion on an unsuccessful drilling campaign hampered, among other things, by strong environmentalist opposition. According to the Financial Times, the supermajor’s decision to partake in the latest Alaska lease sale was surprising for analysts.
However, according to chief executive Wael Sawan, the lease sale concerns a different part of the state. “It is a very, very, very different part of Alaska that we have gone to,” he told the Financial Times. “This is an onshore exploration opportunity in a very well-established basin that has been producing for some time… So this is not offshore Alaska where we have had the challenges in the past.”
Crude oil is not the only thing drawing the energy industry to Alaska in these times of oil and gas trouble. Gas is also a magnet—in this case, in the form of the Alaska LNG project. Interest in the Alaska LNG export project has spiked since the war in the Middle East choked 20% of global LNG supply and sent Asian buyers scrambling for expensive spot cargoes.
Glenfarne Group, the majority owner and developer of the facility, aims to sign binding offtake agreements with buyers soon and advance final investment decisions to later in 2026 and early 2027, company executives told media earlier this year on the sidelines of an energy conference in Tokyo.
“There’s a real interest, particularly with everything happening in the Middle East right now. Everyone would like to get those (preliminary deals) turned into long-term agreements,” Adam Prestidge, president of Glenfarne Alaska LNG, told Reuters in March.
Alaska LNG is designed to deliver North Slope natural gas to Alaskans and export LNG to U.S. allies across the Pacific. An 800-mile pipeline is planned to transport the gas from the production centers in the North Slope to south-central Alaska for exports. In addition, multiple gas interconnection points will ensure meeting in-state gas demand.
The latest Alaska developments show clearly how the Middle East war has put energy security back in the spotlight, making previously challenging locations desirable again. With an estimated 1 billion barrels of oil supply wiped out of markets since the war began, according to Aramco’s Amin Nasser, alternative supply sources have become urgently needed, and not just for the short term. Even if the Strait of Hormuz reopens soon—which at the moment seems unlikely—energy security will in all probability remain a top priority both for energy producers and for consumers.
By Irina Slav for Oilprice.com
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