Abuja — The Nigeria Natural Resources Charter, NNRC) has disclosed that for the Nigerian economy to survive the global economic downturn and the low crude oil price, the Federal Government must adopt policies that would sustain its revenues in the short to medium term while exploring long term options to drastically reduce over dependence on oil post-Covid-19.
In a statement in Abuja, the NNRC disclosed that the sustained low oil prices and price volatility has and is expected to continue to reflect negatively on the Nigerian economy, adding that the recent OPEC+ production cuts may be too little too late.
It stated that Nigeria must look internally for solutions and adopt interventions that take a longer term view.
According to the NNRC, moving forward, all strategies must be sustainable, if Nigeria is to minimize the effects of the inevitable recession due to the falling oil prices, depreciating revenues, rising debt ratio and diminishing reserves.
The NNRC, a not-for-profit policy institute committed to supporting Nigeria’s effective management of her natural resources for public good, implements the Natural Resource Charter (NRC), a set of principles intended for use by governments, civil societies and the international community.
Speaking on the development, Program Coordinator of NNRC, Ms. Tengi George-Ikoli, noted that the group arrived at this position based on the gaps identified in its recently published Benchmarking Exercise Report (BER 2019) which x-rayed the state of the Nigerian petroleum sector, highlighting policy options to support the Nigerian government’s efforts to stimulate growth of the economy and its post Covid-19 recovery.
She stated that to optimize the opportunities from oil and gas exploitation to withstand the prevailing COVID-19 shocks and its after effects, Nigeria must consider a number of policy options to stabilize the sector, maintain revenue flows, attract investment and drive growth, among which is the privatisation of the refineries and the sale of unviable government oil assets.
She said, “Government should immediately privatize refineries as stated by NNPC to improve Nigeria’s access to finished products in country, reducing potential for over reliance on external support for products, to preserve Nigeria’s sovereignty; and sell off unviable government owned oil assets to raise revenue and boost efficiency in the short to medium term.”
Other measures, according to George-Ikoli include maintaining peace and stability in the Niger Delta to sustain revenue flows from oil production; sustaining beneficiation schemes by Niger Delta Development Commission (NDDC), Ministry of Niger Delta Affairs (MNDA) and other interventions that would support the government’s stabilization efforts.
Other measures, she said include: “Improve coordination between federal and Niger Delta state governments on the response to the Covid-19 pandemic including the design and implementation of stimulus plans; liberalize the downstream sector to allow market forces determine pump prices for petroleum and other products. This will ensure the availability of revenues necessary for more critical areas of the economy;
“Improve the efficiency of the downstream oil sector by reviewing its policies, regulations and operational guidelines to ensure profitability, improved private sector participation and improved employment;
“Adopt and constitutionalize a savings mechanism with clear and transparent operational rules. This could be by retaining the more effective sovereign wealth fund (SWF) in the NSIA and transferring funds from the Excess Crude Account, the stabilization fund and other similar funds to the SWF. This will help fortify the Nigerian economy from oil price volatilities and other economic shocks. Ramping and prioritizing domestic gas-based industrialization projects, to diversify Nigeria’s energy supply, increase local employment and reduce domestic demand and Nigeria’s reliance on oil;
“Support a major and urgent shift to gas in terms of investment focus. Gas supply to domestic market for power, industrial & manufacturing feedstock and enabler to economic development. Emphatic shift to the gas value chain offers Nigeria the leverage for socio-economic development in the medium to long term.”