The Federal Government has started close monitoring of the global oil market following the free fall in oil prices, including Nigeria's Bonny Light, which price dropped from $12 to $5.30, Tuesday.
The 2020 budget was first benchmarked at $57 per barrel and 2.3 million per day, mb/d, but later adjusted to $30 and 1.42 mb/d because of prolonged instability in the volatile market, which made previous projections unattainable.
At the current $5.30 per barrel, Nigeria, which economy has been seriously affected by the coronavirus pandemic, needs an additional $24.7 to meet the 2020 budget target.
Investigation by Vanguard showed that it has become a serious source of concern to relevant government institutions, especially the Federal Ministry of Finance, Budget and National Planning.
However, Special Adviser to the Minister, Federal Ministry of Finance, Budget and National Planning, Mr. Yunusa Abdullahi, who confirmed the close monitoring of the ministry, ruled out another immediate budget review.
According to him, the ministry was still waiting for the response of the National Assembly to the earlier review announced by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed.
He said: "We are watching what is happening in the oil market. We were very optimistic that prices would pick up after the recent OPEC meeting after which a production cut was announced. Indeed, we saw a rise in the oil prices, but then we are seeing the prices going to the present level.
"We cannot review the budget on a daily basis as oil prices move. We are watching to see what will happen in the weeks ahead. We are looking ahead to the bigger picture. The minister had said that we would be watching to see what would happen in the market.
"In addition, we are awaiting the response of the National Assembly to the review, which was sent to the law makers. Their position is very important. While we await the National Assembly, we will watch the situation for now."
Recovery will take time
Similarly, in a telephone interview with Vanguard, the president, Oil and Gas Trainers Association of Nigeria, Dr. Afe Mayowa, said the global community might start to indicate signs of recovery from the coronavirus pandemic in the last quarter of 2020, based on current efforts made around the world to develop potent vaccine for it.
He said: "This means that the solution to the current low oil price and consequences on Nigeria and other nations would not come very soon. However, once we have the cure, we would be able to exterminate the disease, before going on with the process of rebuilding our economy.
"From all indications, huge funds would be required to strengthen all sectors of Nigeria's economy, especially education, health, petroleum and manufacturing. The problems we are facing today are mainly because we did not start early to invest massively in key areas of the nation's economy.
"This explains why we are still depending on other nations for virtually everything. As a nation, we should have invested massively in refineries to enable us meet our domestic demand for petroleum products."
In another interview with Vanguard, Prof. Omowumi Iledare, the Ghana National Petroleum Corporation, GNPC, Professorial Chair in Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, said, "Nigeria needs to work towards immediate diversification of its economy, which is still centred on crude oil and gas production. We need to stimulate the development of other important sectors, especially manufacturing, transportation, mining, health, tourism and information technology."
He added: "We also need to urgently invest in research and development, targeted at developing our local capacity to tackle our problems."
In an earlier interview with Vanguard, the former chairman, Petroleum Technology Association of Nigeria (PETAN), Mazi Bank-Anthony Okoroafor, had said: "The past two weeks have been horrendous for the oil and gas industry. We are experiencing a global collapse in demand from the measures taken to counter the spread of coronavirus as refineries around the world are processing less crude oil with transport demand hammered by grounded airlines and fewer cars on the roads as countries lockdown commerce to fight the coronavirus.
"Brent crude fell to $23 a barrel on Monday morning, its lowest level since October 2002. Oil prices have fallen by more than half in the past month as companies cut back or close production. The coronavirus has created a demand shock, which has kept millions at home across the world and wiped out heavy demand for oil that would normally keep planes, cars, and businesses running."
The Director-General, Lagos Chamber of Commerce and Industry, LCCI, Dr. Muda Yusuf, also said: "The COVID-19 pandemic has raised serious concerns about economic sustainability and business continuity, both of which are interdependent and mutually reinforcing. It has become imperative to commence conversations about policy measures and reforms that need to happen for the realization of desired continuity outcomes.
"The government should be the main driver of this stimulus process, as seen in other countries globally. This is done through the injection of liquidity [depending on the fiscal space] or through policy measures that offer some accommodation, which facilitates economic and business recovery."
Vanguard Nigeria News