An end seems to have come to the economic recession plaguing Nigeria since almost two years as the country sees oil hitting mid-$60s in coming months as OPEC bites.
Bloomberg reports that the minister of state for Petroleum Emmanuel Kachikwu, said that crude oil prices, hovering around $55 a barrel since early December, will climb by about $10 in the coming months as OPEC-led measures to curb a glut take hold.
“Ultimately, the effects over the next few months will get us to where we want to be, which is in the mid-$60s,” minister of state for Petroleum Emmanuel Kachikwu said in a Bloomberg Television interview from Rome.
“Oil surged at the end of November and in early December after the Organisation of Petroleum Exporting Countries (OPEC) surprised the market with output cuts and enlisted the help of non-member suppliers to eliminate a surplus.
“While militant attacks on its energy infrastructure meant Nigeria itself was spared from having to pump less, OPEC could ask for its participation,” Kachikwu said.
Nigeria is now seeking to boost production as it recovers from the attacks, which targeted pipelines and other infrastructure. The nation is now pumping about 1.5 million barrels a day and the government is improving its engagement with communities in the Niger Delta as it seeks to build on that increase, said Kachikwu, who’s in Italy meeting the nation’s energy minister as well as the chief executive officer of Eni SpA.
“Once crude oil production returns to about 1.8 million barrels a day, “then we’ll begin to look at OPEC asking us to do some cuts,” he said.
Kachikwu said that while Nigeria “probably will struggle” to reach that output level, the country would eventually join the cuts if production rises high enough. “There’s a willingness of every OPEC member to contribute,” he said.
When oil prices reach the mid $60s a barrel, they will struggle to go higher, he said.
It should be recalled that with a benchmark oil price of $42.5 per barrel and oil production benchmark of 2.2 million barrel production per day, and Forex benchmark at N305/$1, Nigeria put its 2017 budget at N7.298 trillion which is 20.4 percent higher than that of 2016.
The federal government had also put borrowing at N2.36tn- N1.067tn (Foreign), N1.25 trillion (Domestic).
The Buhari led government plans to fund the 2017 budget with quick revenue from oil ( N1.985tn), Non-oil (N1.73tn,) Independent (N807bn), Loot Recoveries ( N565bn ) and other sources( N210.9bn).
Expenditure breakdown is N419bn for statutory transfers, N1.66tn on debt service, N2.9tn on non-debt recurrent expenditure and N2.24tn for capital expenditure.
Another major take-away from the 2017 budget is proposal raises of the Judiciary budget from N70bn to N100bn.
The key capital expenditure are; ower, W& H – N529bn Transportation – N262bn; Interior – N63bn, Education – N50bn, UBEC –, Health – N51bn, FCT – N37bn, Niger Delta – N33bn.