The Nigeria Natural Resource Charter (NNRC) has itemized steps President Muhammadu Buhari-led administration could take to ensure Nigeria’s economy withstands the COVID-19 shock.
The federal government is in the process of slashing 2020 budgetary allocations to critical sectors as it scrambles to raise additional funds to fight Coronavirus, a move opposed by the civil society.
Just last week, the International Monetary Fund (IMF) projected that Nigeria’s economy will face the worst recession in 30 years.
NNRC, in a statement sent to DAILY POST on Thursday, alerted that trouble lies ahead of Africa’s most populous country if the leadership failed to act speedily.
The renowned policy institute noted that as the Coronavirus crisis persists, attempts to curb the spread of the disease continue to significantly affect global revenues and resources.
It said the universal measures of social distancing, movement restrictions, lockdowns, though necessary to stem the spread and impact of the pandemic, have on the other hand, slowed down the global economy.
NNRC warned that low oil prices and price volatility are expected to continue to reflect negatively on Nigeria, which largely depends on proceeds from petroleum products.
To this end, the institute advocated the need to adopt policies that would sustain revenues in the short to medium term, while exploring long term options to drastically reduce over-dependence on oil post-COVID-19.
“The effects of the pandemic on the oil sector underscore the imperative to revisit the much advertised policy of economic diversification”, it said.
While commending the Nigerian government on the measures to sustain the economy through oil sector reforms, NNRC listed additional interventions required to crystallize those policies and further support the economy.
“The recent OPEC production cuts may be too little too late and so Nigeria must look internally for solutions and adopt interventions that take a longer term view,” the experts warned.
Program Coordinator, Ms. Tengi George-Ikoli, said considering NNRC’s recently published Benchmarking Exercise Report (BER 2019) which x-rayed the state of the Nigerian petroleum sector, the Buhari administration should:
“Maintain peace and stability in the Niger Delta to sustain revenue flows from oil production. Sustaining schemes by NDDC, MNDA and other interventions will support the government’s stabilization efforts;
“Improve coordination between federal and Niger Delta state governments on the response to the COVID-19 pandemic including the design and implementation of stimulus plans.
“Liberalize the downstream sector to allow market forces determine pump prices for petroleum and other products. This will ensure the availability of revenues necessary for more critical areas of the economy;
“Improve the efficiency of the downstream oil sector by reviewing its policies, regulations and operational guidelines to ensure profitability, improved private sector participation and improved employment;
“Adopt and constitutionalize a saving’s mechanism with clear and transparent operational rules. This could be by retaining the more effective sovereign wealth fund (SWF) in the NSIA and transferring funds from the Excess Crude Account, the stabilization fund and other similar funds to the SWF. This will help fortify the Nigerian economy from oil price volatilities and other economic shocks. Ramping and prioritizing domestic gas-based industrialization projects, to diversify Nigeria’s energy supply, increase local employment and reduce domestic demand and Nigeria’s reliance on oil;
“Support a major and urgent shift to gas in terms of investment focus. Gas supply to domestic market for power, industrial & manufacturing feedstock and enabler to economic development. Emphatic shift to the gas value chain offers Nigeria the leverage for socio-economic development in the medium to long term;
“Fast-track the passage of the petroleum industry bill to bring about the fiscal, governance and regulatory clarity required to monetize Nigeria’s 200+ tcf of gas reserves. Speedy passage of the Petroleum Industry Bill will provide a clearer strategic direction to the entire industry, re-engender trust, thereby increasing investments which will in turn increase national revenues required for development;
“Review the existing fiscal framework to ensure competitiveness and support Nigeria’s ability to attract investments into the upstream sector, effectively shoring up Nigeria’s diminished reserves;
“Institutionalize cost management strategies within the sector with the overall objective of reducing the high unit production cost of crude thereby improving governments revenue from the sector;
“Immediately privatize refineries as stated by NNPC to improve Nigeria’s access to finished products in country, reducing potential for over reliance on external support for products, to preserve Nigeria’s sovereignty; and sell off unviable government owned oil assets to raise revenue and boost efficiency in the short to medium term.”
