These are very critical periods for World economy as it relates to Crude Oil production and sales. For a country like Nigeria it becomes more crucial in view of the fact that close to 70% of government revenue comes from sale of crude oil.In recent times however, the volatility of the oil prices have threatened the stability of the Nigerian Economy. Specifically the present price of crude oil hovering between $26 & $28 US dollar directly undermines the profitability of the crude oil enterprise, as the cost of production of crude in Nigeria is about $30 USD. This high cost of production is second only to Russia. Saudi, Iran,Iraq all produce at a cost between $12 &$15 USD. The danger signal here is clear and profound.
The implication of this price regime is that we begin to lose $4-$2 USD for every barrel of crude oil we produce. It is pertinent to state clearly here that this ominous situation is totally out of the control of the present administration. But because we are all stakeholders in the Nigerian project and also for the fact that any external threat to the survival or interest of Nigeria calls for a bi partisan Cooperation it becomes imperative that we all put all heads together to find a solution. I believe the government must readjust the budget immediately. Recurrent expenditure must be reduced by 50% minimum, while the capital is reviewed to focus mainly on projects that will directly impact on production and export driven initiatives.
The deficit in the budget must be reduced substantially while the bench mark is brought lower to between $17 & $20 USD. There is need to liberalise some aspects of our Forex policies. Nigerians and foreigners must be encouraged to bring in their foreign currencies with absolute necessary guarantees. Lastly while the current anti corruption war must continue unabated emphasis must now be placed on recoverable to boost our foreign cash inflow. The need for the government to declare a national emergency and nationwide austerity measure regime cannot be over emphasized.