Negative Impact of Dropping Oil Prices on Nigeria
The Nigerian Federal Government has more than halved capital expenditure to less than 10 per cent of the 2015 Appropriation Bill, axing badly needed infrastructure investment due to the collapse in the price of oil, the country’s main source of revenue, according to the full budget submitted to parliament.
The sharp fall in oil prices in the last seven months has resulted in a 28.05 per cent drop in Nigeria’s revenue
Nigeria’s gross receipt in July 2014 was N630.3 billion and N601.6 billion in August 2014, it further dropped to N502 billion in September 2014, N536.6 billion in October, N500 billion in November 2014 and N490 billion in December 2014. The country recorded further heavy decline in gross receipts in January 2015, as revenue dipped to N416 billion.
As a result the Nigerian government cut spending for 2015, devalued the currency by approximately 8% and heavily intervened to support the currency (Naira) which is currently at an all-time low.
The Nigerian Stock Exchange (NSE) All Share Index is down 20% in 2014 and monetary policies have been tightened with bank cash reserve ratios being taken as high as 75% for public sector funds.
Interest rates,have also been hiked 100 basis points.
There is currently a fuel scarcity in the country. Reports blame the Government’s failure to pay fuel subsidy and the cost of interests on bank loans to oil marketers as the main cause. As the country has no fully functioning refinery petroleum products have to be imported. The quantity of petroleum products that was imported is almost been fully used up.
In November 2014, The Minister of Petroleum Resources, Mrs. Alison-Madueke disclosed that she has already briefed President Goodluck Jonathan on the implications of the continued delay in the payment of subsidy to the marketers, adding that she has also scheduled a meeting with the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emiefele, to work out ways of keeping the banks from making good their threats to withdraw facility lines from the marketers on account of the debts arising from the delay in settling petroleum subsidy arrears. What went wrong?
On top of all this the Nigerian Minister of Power, Prof. Chinedu Nebo, was quoted as stating “There is no other country in the world where gas pipelines is destroyed other than Nigeria. We have never seen a set of people that can be as wicked to themselves as we have in some Nigerians who are bent on perpetrating their wicked acts on our gas pipelines”,
We need some good news out of Nigeria!!. We hope the elections go without a hitch and the country is put on path to recovery.
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