A Review of the Nigerian Energy Industry

Falling oil price will weaken Nigeria economy if…

Senator Abubakar Bukola Saraki03 November 2014, Illorin — Ahead of the 2015 fiscal year, a call has been made to the Federal Government to take preventive measure towards reviving Nigeria’s troubled economy by striking a balance in the International price of oil at the foreign market.

The call was made by the Chairman Senate Committee on Environment, Senator Abubakar Bukola Saraki in a statement issued by his media office.

The senator who lamented the incessant fall in Nigerian oil price at the international market stated that if the Federal Government doesn’t take urgent measures to ameliorate impact of dropping oil prices in foreign dealings, it will weaken the Nigerian economy in 2015 and escalate unemployment and other social crisis instigated by economic crisis.

Saraki who described Nigeria’s current economy as a troubled, raised an alarm that the nation’s revenue base is caving in under the stress of falling price of oil in the international market. Therefore, due to the drastic and persistent nature of this fall from the highs of $115 in June of this year, Saraki urged the Nigerian government to redirect its effort from the usual and revive the nation from economy woes.

“I’m of the view that we can’t continue to give the impression that it is business as usual. The fact that the free fall in the international oil market price has seen it loosing over 25% of early June highs means that correspondingly our economy has lost over 25% of budget revenue estimates of the period,” he lamented.

Saraki suggested that a speedy application of “breaks” is salient to avert further economic loss. “More importantly, the fact that it continues to fall unabated means that it is not getting better yet and therefore we must now apply the breaks and act fast before they get out of hand” he stated.

Lamenting the current state of the economy , Saraki expressed the incapability of Nigeria economy to accommodate further imbalances. “Our economy cannot fully withstand the current trend of the oil market. It is not our fault that the market is volatile but it will be our fault if we don’t learn from the mistakes of previous price falls especially that of 2008, to plan timeously on how to ease the pain for our people. This is not the time to paint over the rust, discussions and the choices we make now must be based on economics not politics”.

“The current position to put the benchmark for oil price at $78 is inconsistent with the economic trend and attitude of the managers of our economy, which has shown in the past to be very wary of over optimistic benchmark assumptions settling rather for the more prudent conservative base” he added.

Over the years, statistical records of oil price hasn’t favored Nigeria economy. In 2011, the proposed oil benchmark price was $75 but the available price at the international market was $100 per barrel. Similarly, in 2012, it rose to $111.67 per barrel against a proposed price of $70.

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