231 views | Sanusi Muhammad | August 29, 2020
Before the exit of former President Jonathan, the price of crude oil, Nigeria’s economic pillar was USD36 per barrel and even at that, the country was finding it difficult to sell its crude oil to the global market because of a glut mainly from overproduction by Saudi Arabia, a nation of about 12million people producing almost 10million barrels of crude oil daily, the Corona Virus pandemic and coupled with America’s self-sufficiency in energy because of the existence of its tremendous shale oil and fracking gas production.
USA was the consumer of about 60percent of Nigeria’s crude oil production but today, is not buying a single drop. In fact there was an on-going serious talk, in the United States to start exporting oil than importing.
USA is now comfortable for refusing to allow a consortium of Canadian and American companies to complete a trans- American pipeline that could have been taking crude oil across America to the Gulf Coast from Canada.
The refusal ostensibly was based on environmental considerations but in actual fact, it was because the USA now affords to play the environmental card because it does not need additional crude to compete struggling American oil companies. The fact is that the project has been mothballed and would be resuscitated in the future particularly as the Republican Party has won the presidential election. Leaders of the party deny that the global environment has been abused because of industrial processes and therefore needs no abatement measures to be taken.
This is in the face of overwhelming scientific evidence. The impact of this for Nigeria is that it has not seen how low the price of crude oil will drop.
The slowdown in Indian and Chinese economies and consequently reduced demand for Nigeria’s export of hydrocarbons has created a buyer’s market and crash oil price regime.
The oil-producing Middle East is right at their backyard and transport costs compared with costs in transporting African oil is lower. Furthermore, the Republic of Iran has come into the global market in a big way following its agreement with the international community to put a hold on its hidden nuclear weapons programme. Russia, the other big oil producer needs all the money it can get from oil to maintain the illusion of major power and its military operation in Syria and because of these, it is producing as much oil as its capacity can produce.
Current estimates put its production at about nine million barrels per day. There is, therefore, oversupply to the global market of what Nigeria depends on for external revenue and survival.
What should then be done? If the Saudis can be persuaded that its strategy of driving aground American shale oil fracking gas production is not working as expected even though some small companies have folded up, then an appeal can be made to that country to reduce its production through diplomacy at Organization of Petroleum Exporting Countries (OPEC).
This is a big if because that desert kingdom and its innumerable princes have gotten so used to trillions of dollars from oil for political and social stability that will be a herculean effort persuading them to change course.
OPEC should be persuaded to meet in extraordinary session to cut production. Countries like Mexico and Russia should be invited to coordinate their oil production with that of OPEC to save the industry in the interest of the global economy because at the end of the day, if the countries depending on energy production collapse economically with resultant political ramifications, the whole world will be destabilized. Cheap and affordable oil may be good for some but at the end of the day, it is not good for the global economy.
The world needs in the short term, huge financial resources to operationalize the COP 21 Global Agreement on climate change worked out in Paris. Critical to that agreement is innovation and adaptation and every country will need adequate resources to implement the mechanisms.
We have been talking about economic diversion in Nigeria for decades but easy crude oil money dulled our collective brains. Now the chicken has come home to roost. Serious diversification and clean technology-led industrial production may take time. Our agriculture, neglected over the years for easy oil money cannot be revived by a wave of the hand. Even the ballyhooed solid minerals sector needs all effort at organization, correct legal regime and attraction to direct foreign investment. In spite of all the obstacles and impediments, we cannot just lie down doing nothing waiting for better times to come in an uncertain future as suggested by Bauchi State Governor Bala Muhammed.
According to him, “We must do something immediate to normalize the situation of today and plan for a better and robust tomorrow. A campaign to rationalize the use of the nation’s foreign reserve must begin in tandem with the nation’s economic blue-print
“In line with global best practice, my government has already far in boosting tourism and agricultural potentials of the state. We are going to partner of developing partners to change the tide and create wealth within our natural and human resources against cloudy moments”.
Going back to memory line, in the 1950s, Mbonu Ojike, a prominent politician had asked Nigeria to boycott the boycottable which we must as a progressing nation embrace today as a way out of the quagmire. Now, that has to come with a cost and is idle for communication to come in. Government at all levels must explain to Nigerians that the time for easy life has come to its end. This has been announced severally to the people in view with the pathetic situation of the economic situation.
Nigerians need to know that there is no more champagne, red and white wine, brandies and whiskies, fanciful suits and shirts. This is the time to engage our local tailors and whosoever is ashamed to wear made in Nigeria clothing should be ready to source funds elsewhere but not from public resources.
Those who brought down the economy to its knee through looting and wastage of foreign reserves must be tried for economic sabotage and jailed. Punishment must be sure, certain and swift. No more prevarication and wringing of hands about what to do about corruption. Whatever was collected from looters must be made public and those involved publicly shamed. This is the only way to prevent recovered looted funds being re-looted as is characteristic today.
Critics who go around trumpeting poor performance of the Buhari led federal government must be adequately and seriously challenged to tell the world what they could have done in face of global economic meltdown and inheritance of a clean-swept treasury we had earlier faced whereas in Greece, the rate of unemployment is 60 percent and the situation in southern Europe and the Balkans generally is just slightly better. While everyone agrees there is need for responsible opposition and existence of social critics, but no one must be allowed to misinform the people that either the president or the governors do not care or love to serve the people or punishing a section of the people for stealing public funds because they are hard, uncompromising, timid and uncaring! This uncouth criticism must always be confronted head-on.
This government is our last chance to get it right. The difficult time we are facing is the right time to put us n the right trajectory so that when good times return, we will be well set on a path of frugality, rectitude and integrity rather than on the path of waste, stealing, dependence and uncontrolled squander-mania which previously prevailed.
In this regard, all branches of government must show the light so that the people can find their way. The continuous call for salary increase may not be ideal, rather we should all be helping government and thereby ourselves to build a strong country with a virile and sustainable economy. Nigerians must learn to work and work hard for good living. An economy based on unbridled importation of all sorts of junks from India, China, Indonesia, South Korea etc is not a sound economy.
Governor Bala Muhammed said, “We must learn to produce our needs. We must not go for what we cannot produce. An economy based on trading of other people’s goods is no economy. The time of political and economic frivolity is over – whether it is liked or not”! The eating now lies in the pudding. The journey to greatness has started from all fronts.
Muhammad is a commentator on national issues