Fuel crisis in Nigeria is usually attributed to shortfall in supply, activities of militants at the Niger-Delta region, panic buying, speculative activities of oil marketers (racketeering), crash in price at international market and possibly, increase in demand for the product.
To view Nigeria’s fiscal authorities and the National Economic Council (NEC), the single most critical bane of the economy and public finance, crisis of oil price, is threatening to be back on the front-burner of issues around Nigeria’s economy.
Toward the end of November 2018, international oil price had crashed to $58.2 below the 2019 Federal Budget oil price benchmark of $60 per barrel, after about seven consecutive weeks of free fall. Oil price had peaked at $86 per barrel during the early days of October 2018.
This development has already undermined the basic assumptions by the Federal Government which informed all the figures in the 2018 budget. Now the country has massive backlogs in capital project finance and execution.
In recent time, the Ministry of Budget and National Planning disclosed that the capital projects for 2017 recorded only about forty percent (40%) implementation as at end of June 2018, which is the statutory lifespan of the 2017 budget cycle. This means that about sixty percent (60%) of the capital projects have either been abandoned or postponed or be carried over to the subsequent budgetary years.
In the same vein, the 2018 budget which is about five (5) months in the implementation cycle, is said to be facing similar revenue constraints. Also, the 2018 budget appears to have already failed before it is started going by the short-to-medium term oil price outlook.
All these are happening against the backdrop of massive campaign and sloganeering for economic recovery and diversification drive of this Government since its inception in 2015. The Government took over from its predecessors on the shoulders of similar crises arising from the massive decline in oil prices between mid-2014 and 2015.
All reasonable Nigerians have consensus that economic or revenue diversification is the single most important economic policy pursuit of the Buhari-led Government. Hence, many wonders why another deep decline in oil prices will put Nigeria in economic trepidation. As such, more has to be done to have buffers against economic shocks if not now but in the nearest future.
To borrow leap from other countries and to underscore the seriousness of this challenge, recently, the Minister of Petroleum, Industry and Mineral Resources of the Kingdom of Saudi Arabia (KSA), Khalid Bn Al-Falih, had to be on a diplomatic shuttle to Nigeria to ramp-up support for the Organization of Petroleum Exporting Countries (OPEC) for checkmating the crisis.
However, these diplomatic efforts can only bring temporary reliefs since oil prices are not stable, it always fluctuates. Nothing short of a serious transformation and diversification of the economy away from oil dependency will do.
The time has ripped for the President Muhammadu Buhari-led Administration to tweak the Economic Recovery and Growth Plan (ERGP), to fast-track its elements that pursue the early diversification of the economy. The country can no longer afford these cyclical falls into recession due to oil prices. Having only recently crawled out of recession.