A KALEIDOSCOPE INTO THE RECENT PAST
Pearl Buck once said “If you want to understand today, you have to search yesterday”.
Why Nigeria is in a state of recession today is not unconnected to the events in the past, in just five years, between 2010 and 2015, the last administration sold crude oil for $120 and most times $110 (the highest) earning N55 trillion in total while the total earning from sales of crude oil since independence was 96.212 trillion, please kindly do the maths.
Some of us beclouded by sentiments and hatred are quick to forget that the international price of crude began to drop drastically in the second quarter of 2014 plunging all the way down to $28 per barrel in the first quarter of 2016 and we look for who to blame, we quickly lay the bulk at the doorstep of the President Muhammadu Buhari. Well, after all he asked for this right?
Well, here is one analogy: For years you’ve been living on two million naira monthly salary, you have a family of five, you bought a house and three cars, one for you, one for you wife and one for your children, you pay their school fees, you feed them till their cheeks become chubby, and at the end of every year, you take them on exquisite vacations abroad.
Then by happenstance, the company you work for had to cut loose some workers and reduce salaries, you are fortunate they still keep you but your salary was cut down to seven hundred thousand naira, would you be able to spend the way you use to? would there not be some adjustment in the house?
So if you ask me “Why did Nigeria suffer Recession”?
My simple answer would be; the consistent pipeline vandalism and the reduction in price of crude oil in the international market.
In 2015 alone 3,000 pipelines were vandalized translating to a loss of over 643 million liters which hitherto amounts to a loss in monetary value of up to 51.28 Billion Naira.
Between January and May 2016, 1,447 pipelines were vandalized also leading to a loss of 109 million liters of petroleum products and 560,000 barrels of crude oil that could have gone into refineries. It was also at this period that our domestic gas supply dropped by 50 percent due to vandalism leading to nationwide power outage.
NNPC is targeting a consolidated approach to reviving the refineries, they want to bring in investment partners to revamp the existing refineries so the production capacity can at least move up to 75 % but that is only possible if the pipeline vandals stop their illegal activities.
Is this reading getting too long? I think so too, but please stay with me on this journey to understand the core issues…
It was reported that in the last ten years, 16,085 pipelines breaks were recorded, 398 pipelines broke due to ruptures while the vandals accounted for 15,685 pipeline breaks.
Be honest, would much be gained for our collective good if all avenues of making money are blocked by some people?
Is there a way forward?
YES! there are always solutions to problems, this year looks good for Nigeria already as oil price has been on the rise from $55 per barrel to $55.5 and now $58.37.
The 2017 budget oil price benchmark for revenue is $42.5, but with the increase in price of crude oil?—?thanks to Opec?—?a difference of $12.5, $13, and $15.87 will go into what we call the Excess Crude Account which will also in turn serve as a cushion against the plummeting Naira to Dollar exchange valuation.
Brethren, it is important to note here that the simple reason for the current Naira to dollar exchange rate is the lack of dollars in Central Bank of Nigeria’s coffers (please don’t ask me if I’ve seen CBN’s vault)
So if you were asked what caused the Forex crises, know that it was caused by the three headed monsters;
- Reduction in price of the only reasonable thing we produce for now (Crude)
- The incessant pipeline vandalism that further reduces government’s income
- Looting and wasteful spending when things were going good.
We can talk about the Bureau-De-Change and CBN’s erstwhile pendulum Fiscal and Monetary Policies later..
SUSTAINING PEACE 101
“Order your thoughts and you will order your life. Pour the oil of tranquility upon the turbulent waters of the passions and prejudices, and the tempests of misfortune, howsoever they may threaten, will be powerless to wreck the barque of your soul, as it threads its way across the ocean of life”. -James Allen
The above quote was drawn out of my understanding of the psyche of this country, I think we have been driven by forces that are not beneficial to us, this is the time to redirect Nigeria’s soul, This is the time to order our collective thoughts away from greed, distrust, hatred and seek peace, tranquility and economic prosperity in the Niger Delta Region and in Nigeria.
Our country currently produces an average of 1.6 million barrels of crude oil in a day at the rate of $58 but we can increase our production to 2.2 million barrels if vandalism stops.
If we are able to keep our production at this level for six months without pipeline vandalisation, Nigeria would be out of recession.
For the benefit of our collective economic prosperity, I want to quote Jalaladdin Rumi to reinforce my point on the need for the Federal Government and the Niger Delta Agitators to come to a middle ground.
“Out beyond ideas of wrongdoing and right doing there is a field.
I’ll meet you there”
If you are reading this, may 2017 be a year of economic prosperity for you, your family and for Nigeria.