‘Options to petroleum as forex earner’
The plummeting crude oil prices’ has phenomenally pounded in the last one and half years, the respective economies of Organisation of Petroleum Exporting Countries (OPEC) members that are reliant on the commodity as major foreign exchange earner.
Crude oil, being the primary export of Nigeria, has put pressure on the naira, giving the United States dollar a big edge over the national currency.
Deliberating on the issue and proffering possible solutions to the declining oil prices and forex crisis in the country, stakeholders who gathered at the third edition of the Nigerian NewsDirect quarterly roundtable, emphasised the need to deepen financial sector reform and diversify the economy.
Speaking at the event titled: “Oil Price Downturn and Forex Crisis: Challenges, Possible Solutions and Opportunity”, the first Vice President, Chartered Institute of Bankers of Nigeria, Segun Ajibola, urged policy makers to deepen institutional mechanism aimed at providing an enabling environment for the money and capital markets.
Ajibola said that there should be some level of continuity in government policy as well as national long term economic blue print that will go a large extent to drive activities of any government in power.
He stressed the need for policy makers to embark on concerted measures aimed at diversifying the economy away from reliance on hydrocarbons.
Dwelling on infrastructural decay, Ajibola stated: “Most infrastructures, including roads, electricity, water supply are in moribund state and requires rehabilitation.
In the light of this, he said that there is an urgent need for government to rehabilitate the power infrastructure aimed at up scaling capacity for electricity generation, transmission and distribution across the nation”.
He emphasized the need for the government to tackle the issue of corruption, which he said, would help the country to manage oil revenue effectively.
He stated: “The downturn in the economy of Nigeria at the moment will provide an opportunity to chart a new course for the nation. Charting a new course in the sense that strategic thinking on how to transform the economy from a mono to a multi-diversified economy where the total revenue accruing to the government comes from diverse sector.
Assistant Director at Department of Petroleum Resources (DPR) Wole Akinyosoye said that for every barrel of crude oil Nigeria exports, the country exports employment opportunities, stable power supply and good roads among others.
Akinyosoye who stated that Nigeria is exporting crude with no or little value, noted that whatever the prices of crude oil, the country should be able to float.
According to him, because of the downturn in oil prices, Nigeria needs to diversify into refining its crude locally which he said, would definitely create job opportunities for Nigerians.
While calling for optimization of the value chain of the downstream sector,Akinyosoye said that the drop in oil prices offers opportunities for reconsideration of strategy.
“Due to the fact that our refineries are not working at optimum capacity, out of the 2.3 million barrels of crude we produce daily, we rarely refine 100, 000 barrels. We are dealing with dilapidated refineries. We are dealing with elite that are not interested in value to the economy. We are dealing with education system that is not functionally related to our industry. We are dealing with an economy that is export dependent,” he said.
According to him, Nigeria is not leaving up to its destiny in the oil and gas industry and the way out for the country to empower its citizens and economy, add value to what we produce and ensure we produce what we consume.
He said that Nigerian oil and gas sector is like a sector his father operated years ago, producing cocoa but not adding value to it.
“India has the population of 1.27 billion and crude refining capacity of 4,200,000. Iran has population of 54.1 million people with 1,618,000 crude refining capacities. Saudi Arabia has a population of 29.2m people with the refining capacity of 3,300,000, while Nigeria has the population of 170 million people with the refining capacity of 450,000. Government should look at diversifying to our refineries,” he said.
He however said that the future is very bright despite all the challenges in the country, saying that the 36.2 blnbbl oil and 182.8 tscf of gas reserve is a sizeable deposit and reserve.
The 182.8 tscf of gas we have, we did not have to send geologists to go look for gas. We got them because we discover oil. If we actually went out to look for gas we will really get more than 182.8 tscf of gas.
He said that with the unbundling of the power sector in Nigeria and the fact that the country currently suffers from energy poverty, the pressure is high on gas as a critical resource to drive the reforms required to grow the sector.
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