So long as Satan exists, satanic actions must be witnessed. The satanic tool is the human being who at the height of satanic thought causes provoked or unprovoked aggression or war against fellow human beings. While under the influence of satanic drugs, nothing matters other than the destruction of living and non-living things. Such is the case with the current war between Russia and Ukraine. The powerful and the underdog, so to say.
Of course, such a satanic act brings good and bad tidings to neighbours far and near. A good example is the current crude oil environment where exporters are beneficiaries of the rising crude oil price and importers are gnashing their teeth for having to pay more for the same quantity of oil. Nigeria’s case is like that of hermaphrodite in a literary sense of a beneficiary and a loser. The country has, since the war broke out, been exporting crude oil within the region of $100 per barrel and importing refined oil products at between $130 to $150 per barrel. It is part of the economic mismatch caused by economic mismanagement and misalignment.
Simple economics teaches that the higher the price the higher the supply. So, Nigeria should be supplying more oil to the world market at the current higher price and making more money to meet up with developmental needs and practically reduce the deficits in the 2022 budget. Such a theoretical position under market mechanism is not possible within the context of operations in a cartel environment. The cartel, like the Organisation of Petroleum Exporting Countries, often fixes the output for member states while the world market determines the price. Assuming the country has the latitude to produce, using the market mechanism and given the activities of competitors in the oil market, we can be producing far above two million barrels per day to take advantage of the shortages arising from the fall in the volume of production and transportation due to the war. Unfortunately, even the 1.78 million barrel per day quota allocated to the country by OPEC under the cartel arrangement remains unachievable! Another mismatch within the context of theory and practice.
Reports show that Nigeria’s daily average oil production in 2021 was 1.42 million barrels per day and in January 2022, the production was 1.399 million barrels per day while it fell to 1.25 million barrels in February 2022. OPEC itself noted in its report that crude oil output increased mainly in Saudi Arabia and Libya but declined in Nigeria and Equatorial Guinea. Actually, the same OPEC report affirmed that Saudi Arabia produces around 10.225 million barrels per day which is over and above the 10 million barrels per day allotted to it and as against our two million barrels per day! What an irony? To compound the psychological trauma the whole lugubrious situation is foisting on the thinking faculty of patriotic Nigerians, the General Manager of the NNPC, Mele Kyari, blamed the whole issue of underperformance on underfunding of the corporation! So, NNPC is underfunded to meet the challenges of meeting the OPEC quota to bring in more money? Real irony.
At one point in recent time, there were reports that NNPC was recording profits and at another, we were told they were making losses. Actually, whenever there is a threat of probe of the NNPC by the National Assembly, the corporation would bring the good news of profit and thereafter when the threat subsides, they sing the song of losses. When a corporation is not producing fuel and is maintaining a full complement of staff with humongous salaries and emoluments, there must be deep questions to ask. There is the need for comprehensive auditing of the accounts by credible auditing firms (or firms). More importantly, however, is the issue of underfunding by the Federal Government. What really are they funding besides debt servicing and conspicuous consumption of our leaders who neither eat local food nor take local drugs? They eat imported food (not yam and bread) and seek health care abroad. Education is underfunded, same with the health sector, the diplomatic offices abroad or embassy, et cetera. This is despite revenue from oil and gas, and non-oil sources as well as internal and external loans which invariably form part of funds available to the governments. That takes us to the issue of debt.
As I mentioned elsewhere, Nigeria’s Minister of Finance deserves an award from the debt market for making Nigeria the most active country in the world debt market. The Debt Management Office informed the nation that the country borrowed N6.64 trillion and serviced debt with N2.93 trillion in 2021 alone! More alarming is the report that the total public (federal and states) debt stock rose from N32.92 trillion in 2020 to N39.56 trillion in 2021. In view of the rising price of crude oil in the international market, the minister was reported to be eying the international bond market for new loans. She said that the Federal Government will tap into a $2.2 billion Eurobond for fuel subsidy funding and papers to effect the action are already under processing. The easiest way to run the Nigerian economy is through borrowing. While other countries are thinking of how to minimise the effects of high cost of fuel and the attendant inflationary pressure, our own finance managers are happy we are going to pay more and encourage greater usage of imported fuel with attendant hardship on the citizens and prolonged underdevelopment of the nation.
I think the first action to take by the minister would be on how to reduce the budget deficit with the additional money coming from the crude oil sources. The 2022 budget was based on $60 per barrel of oil but we are now making around $100 per barrel with a gap of about $40 on each barrel of oil when we export virtually 1.7 million barrels daily. A huge amount. The second round of thought should be why are we not meeting OPEC quota and what should we do to close the shortage gap while the third set of questions should be how to minimise the negative effects of the rising crude oil prices and the effect of that on imported fuel. Since most manufacturing industries and transports use diesel rather than petrol, how do we assist them with intervention to prevent shutdown and consequently unemployment? I do not know whether the president’s economic team is still alive and working or the members are already minding their businesses like Prof. Charles Soludo, when nobody seems to be listening to them.
Times are hard or becoming increasingly harder. To show that conditions have worsened with poverty trap growing in the last few years, the manufacturers of soft drinks and even the alcoholic drinks now fill their drinks in poverty bottles or, according to what I heard in a motor park, lanco bottles (whatever that means). It is possible that the citizens are not asking enough questions on governance competences. The National Assembly members have been voted to serve, provide checks and balances or go-between for the citizens and the executive. They need to find greater ways of influencing activities of the executives. In order to avoid public unrest or protests, the National Assembly needs to enforce, through effective and workable legislation, effective, efficient, transparent and accountable governance structure and system.
It is not enough for the government to tell the people that things are hard in all countries around the world due to the Russia-Ukraine war. We can point out what is being done in some countries to mitigate the hardship. In fact, the question to ask is whether we are even better off before the war. But for the economic policy mismatch of the country which still persists, this would have been the time for Nigeria to reduce its debt stock, budget deficits and possibly smile to the bank.
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