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Oil price slump: Nigeria may lose $9b

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BARRING quick halt in the on-going slump in global crude oil price, Nigeria may lose over $8.63billion in six months from projected earnings accruable to the country.

  This is contained in a report released by a renowned investment management firm, Goldman Sachs Group, on its crude oil price prediction.

  Experts warn that if this fear turns real, the nation’s economy may slide into another round of recession owing to shocks from the expected crash.

  Already the nation has lost over $335.7million after crude oil price plunged further last week to hover around $30 and $36 per barrel catapulting totally away from the 2020 budget benchmark of $57 per barrel.

  Market indicators around the world predicted that oil price would stay near $30 per barrel in the next six months as Saudi Arabia-Russia price war rages on.

  But with crude oil sales accounting for more than 90 per cent of foreign exchange earnings in Nigeria, while the country’s 2020 budget passed in December last year was calculated on crude production of 2.18 million barrels a day at a price of $57 per barrel, fear is mounting steadily on how the economy will perform if these projections are not met.

  As at yesterday, the benchmark Brent crude futures traded at $35.44 per barrel after dropping by 20 per cent at slightly above $36 a barrel where it traded last week Monday, before the commodity had traded at an average price of about $35 per barrel since the recent price crash.

  At 2.18 million barrels per day and a cost of $57 per barrel, as captured in the 2020 budget, Nigeria earned about $124.26million daily. But the nation’s crude oil earnings have plummeted to about $76.3million daily following the latest drop in oil price.

  Findings showed that the difference between the projected earnings ($124.26million per day) and the actual earnings ($76.3million daily) was $47.96million posing a startling potential of the country losing about $47.96m daily since the recent crash in crude oil prices.

  This represents an unnerving $335.7million loss in the last one week.

  The country is, therefore, set to lose a whopping $8.63billion in six months’ time going by Goldman Sachs’ prediction that crude oil would trade for near $30 per barrel in the next six months.

  It will be recalled that Nigeria passed a record N10.6trillion ($34.6billion) 2020 budget in December last year. But experts are jittery that a loss of $8.63billion from the country’s crude oil earnings would send the appropriations to jitters with enormously adverse impact on the entire economy.

  With an economic growth around two per cent, they noted Nigeria was still struggling to shake off the effects of the 2016 recession, which was caused by the oil price collapse of 2014.

  Meanwhile, critical stakeholders in the oil and gas industry have described the prediction as wary, advising federal government and policy makers to expedite action on warding off another round of recession from Nigerian economy.

  The stakeholders that kicked against the unsettling fear include Petroleum and Natural Gas Workers Association (PENGASSAN) AND National Union of Petroleum and Natural Gas Workers of Nigeria (NUPENG), among others.

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