Federal Government of Nigeria’s plan to search for new markets for its crude oil is a disturbing reminder of its tardiness in responding to issues affecting national wellbeing. The move is obviously a response to the decision of the United States (U.S.) to stop buying Nigeria’s crude oil and the downhill course of the global prices of the product. The question this development has rightly elicited is : must Nigeria wait for the U.S. to stop buying her crude oil before exploring other markets?
Relinquishing its earlier insistence that the U.S. position would not have any adverse impact on the economy, the government has obviously reconciled itself to the imperative of widening the market for its crude oil, albeit belatedly. It is, therefore, clear that the U.S. decision not to buy crude oil from Nigeria and the plummeting prices of the product have negatively affected the economy. Thus, Nigeria’s leaders have turned the proverbial ‘wise’ dog, seeking to hide a knife after its ears had been cut with it. While the move of the government to expand the market for crude oil is a good one, it bears reiteration that it is coming too late. The decision of the government is symptomatic of knee-jerk reactions to issues affecting the polity. Instead of being proactive, Nigeria’s leaders only react to developments after their calamitous consequences have become obvious. If the U.S. had not stopped buying from it, would the government not have thought of the need to explore other markets for its product?
Indeed, there has always been the apprehension that Nigeria’s oil boom carries with it the inherent danger of coming to an abrupt end with the Organisation of Petroleum Exporting Countries (OPEC) once warning that it expected demand for crude produced by its 12-member countries to fall by 1.1 million b/d over the next five years and to remain below 30 million b/d through 2020 alongside steadily rising non-OPEC supply driven by the shale oil revolution. Apparently grappling with this reality, the Nigerian National Petroleum Corporation (NNPC) in its September 2014 Petroleum Information report listed government’s efforts to make Europe, Asia, South America and African nations as the new destinations for its crude oil. However, the urgency of the current energy crisis requires that the government has to move beyond mere announcement to action.
The government should seek to reach concrete agreements with China, India, Argentina and African countries such as Kenya which have all shown interest in buying or increasing their order from Nigeria. And, breaking from the obsession with oil, Nigeria should also expand its gas market with a view to having a larger revenue base.
The country relies on oil as the major source of its revenue. It does not, therefore, require any external prodding such as the position of the U.S. before the government takes measures to strengthen this source of revenue. With time, other countries may join the U.S. in discovering alternative energy sources, thus reducing the demand for crude oil. This possibility calls for sound economic initiatives and working hard on other sources of revenue that could be explored. Analysts have always advocated a diversification of the nation’s revenue base. Yet, over the decades, these calls have been either ignored by successive governments which refuse to diversify the economy and wean it from its dependence on oil or, at best, acted upon half-heartedly. The result is the morass in which the nation now reels.
Beyond looking for new buyers of crude oil, now is the time for Nigeria to consider other viable sources of revenue. The country is endowed with other natural resources, mineral and agricultural, and the fixation on oil, culminating in failure to tap these resources that could provide a strong buffer to the economy, must stop.
The passage of the Petroleum Industry Bill (PIB) could also be a very good response to the energy crisis spawned by the fall in oil prices and the non-purchase of Nigeria’s oil by the U.S. or other countries. There are various elements in the PIB such as gas price reform, gas commercialisation and gas infrastructure framework that would keep the oil sector a veritable source of income for the country.
Besides, now is the time for governance in Nigeria to exist in tandem with prudence in the management of state resources. The wastage which has become a vexatious hallmark of governance and which has constituted the bane of the economy should be stopped. And government at all levels should bring fresh imagination to the identification of other avenues of generating revenue instead of tying their fate to oil.