Experts and other concerned Nigerians have been raising their voices of advice to the Federal Government to immediately take steps to save on the emerging boom in crude oil sales.
This call is well placed because for some time now, there has been a steady rise in the price of crude above our budget benchmark.
Throughout the month of March 2021, Brent crude oil price traded steadily above the $70 per barrel mark. Though it recently dipped to $62. President Muhammadu Buhari had announced a benchmark of $40 per barrel in his 2021 budget presented before the National Assembly in December 2020.
What it means is that currently crude oil price is significantly above this year’s benchmark which should automatically go into the Excess Crude Account, ECA, and more importantly, the Sovereign Wealth Fund, SWF. Experts have predicted that the emerging good fortunes of oil sales (which sharply contrasts with the situation last year at the peak of the coronavirus pandemic when there was a serious glut) will likely prevail for the rest of the year into 2022, due to the force majeure of missile attack on Saudi Arabia’s 6.5 million barrels a day capacity Ras Tanura oil terminal.
Already, the Nigerian National Petroleum Corporation, NNPC, has notified consumers of petroleum products, especially Premium Motor Spirit, PMS, that it can no longer shoulder the N120 billion a month subsidy on petrol which emerged as a result of the rise in crude prices. What that means is that consumers may start paying up to N230 (up from the current N166) per litre of petrol when the subsidy is withdrawn.
It is sad that a government that touts transparency and places top priority on anti-corruption is waiting to be pressured to take a proactive step to underscore its seriousness in upholding the sanctity of our public finance.
This is more so as President Buhari regularly blames the previous Peoples Democratic Party, PDP, regimes of failure to save on oil windfalls during the several cycles of oil boom that took place under their watch.
It was during that same era, with Dr. Ngozi Okonjo-Iweala in charge of the economy, that the ECA and SWF were created, and funds accruing to the three tiers of government were displayed monthly in prominent national dailies for public perusal.
We call on the Buhari administration to come up with its own signature policy of preserving the excess revenue on oil sales. They should also prevail on the governors to realise that this is not a time for another jamboree.
Without the federal and state governments reaching agreement on the need to save on the windfall, the effort will be futile as the governors will demand for their state ECA allocations.
Oil windfall never lasts. We must save for the rainy day.