Maybe, they didn’t think that stargazing
(or futurology) was part of their schedule. They should find out what
nearly happened to the king’s men (the magicians, astrologers, and
sorcerers) who lost out to Daniel at the court of King Nebuchadnezzar.
Had God not revealed the dream that the king had forgotten, and its
interpretation, to Daniel, all the wise men of Chaldea would have been
executed.
It was sweet justice that the Nigerian
electorate asked President Jonathan and his men to go after their
underwhelming outing. Ahead of the drop, some African oil companies got
lured into offshore exploring via leveraged buy-outs of some
foreign-owned oil companies. In 2014, they bought small oil fields from
some oil majors who saw the future coming.
Shell sold its Oil Mining Licence 29 for
$2.7bn to a consortium of Aiteo and Talaveras; Nigeria’s Oando Plc,
that bought ConocoPhilips for $1.7bn, was lucky to have substantially
recouped its outlay on a purchase that Americans would have called a
“lemon,” a bad deal. But will certainly be less ambitious in the near
future expansion plans. Nigeria’s economic planners should have wondered
why the OMLs that normally run through 20 years before the licence is
renewed were suddenly being hawked.
Now that oil prices have slumped, those
yet to pay off their loans will wipe their brows, and pay through their
noses, to service the loans. Be reminded, for the umpteenth time, that
America’s shale oil is a major cause of the crash in oil prices. By the
4th Quarter of 2014, when America quit buying, Nigeria’s crude oil
earning dropped to N1.9tn, and the economy slumped by 5.9 per cent.
According to a report by The Africa Report news
magazine, Sonantrach, Algeria’s state-owned petroleum company, leader
of the pack of Africa’s biggest oil companies, lost traction to the
stagnation. And, to survive, Sonango, Angola’s state-owned oil company
is going to have to take a $10bn loan from China Development Bank, to be
doled out in measly and humiliating tranches over a 10-year period.
The loan is to enable Angola to build a
refinery in the city of Lobito, to produce 200,000 barrels of petroleum
products daily. It makes better economic sense to expand to the offshore
segment of the oil industry now that the price of unrefined crude oil
is going down south.
The Minister of State for Petroleum
Resources, Ibe Kachikwu, has wisely caught on to this trick. He proposes
to sell Nigeria’s crude oil to the country’s oil refineries, with the
hope of halting or reducing importation of petroleum products from
countries that have got their oil refining act together.
In 2014, the world price of phosphate
dropped by half – from $200 in 2011, to $100 per tonne. Even so,
Morocco’s phosphates miner, Office Cheritien des Phosphates, that sells
fertilisers to more than 150 companies mostly in the developed countries
achieved $1.55bn revenue in 2014.This, in spite of separatist Polisario
Movement occupying a large tract of Morocco’s territory that has a
large surfeit of phosphates and crude oil deposits.
Experts confirm that oil accounts for a
large percentage of the world’s energy consumption, ranging from a low
of 32 per cent for Europe and Asia, to a high of 53 per cent for the
Middle East. Other regions of the world are South and Central America,
44; Africa, 41; and North America, 40. The world actually consumes about
30 billion barrels of oil per year, with developed nations as the
largest consumers. The United States alone consumed as much as 25 per
cent of the oil produced in the world in 2007.
The production, distribution, refining,
and retailing of petroleum, taken as a whole, represents the world’s
largest industry in dollar value. And contrary to the big lie that they
tell the world, America’s government provides a heavy public subsidy to
petroleum companies. These so-called oil majors get a tax break at
virtually every stage of oil exploration and extraction, including the
costs of oil field leases and drilling equipment.
The petroleum industry in Nigeria is the
largest in Africa. Yet, the National Bureau of Statistics revealed that
by 2014, the petroleum industry dipped, and contributed only 15 per
cent to Nigeria’s economy. Though the petroleum sector is important, it
remains a small part of the country’s overall diversified economy. You
may wonder why the entire country wants to collapse because the oil
industry has challenges. It is because a large chunk of government
revenue is from oil royalty, and Nigeria’s import bill is largely funded
from petro-dollar.
The real sector has huge investments,
but meagre returns, because of infrastructure deficiency, relatively
inferior manufactures, and high product prices, all because government
is unable to manage monetary and fiscal policies. The challenge to the
Nigerian economy is how to extricate the real sector from the vice grip
of government’s uninspiring economic policies.
The economy decelerated in 2015, mainly
due to low oil prices, turmoil in financial markets and severe
imbalances in the foreign-exchange market. Gross Domestic Product
expanded by 3.0 per cent in 2015, far below 2014’s 6.2 per cent. This
was the weakest growth in over 15 years, although some analysts project
an uptick in 2016 growth. They actually think that by 2017, the economy
would expand by 6.7 per cent. Hope is rising.
But the naira is facing a very hard
time, as it experiences a painful depreciation that the government
appears unable to check. The whipping boy, of course, is the drop in
crude oil prices. See how the managers of the economy bungled the 2016
Budget proposal, which the National Assembly should be turning into an
Act any moment from now.
In 2014, Stanbic IBTC Bank Plc
Purchasing Managers’ Index, that monitors production output and
procurement trends in Nigeria, fell from January’s 51.3 to 47.9per cent
in February, the lowest reading since April 2015. As a result of this
fall, the indicator experienced a dip below the 50-threshold that
separates contraction from expansion in business conditions.
According to Stanbic IBTC Bank, “the
February PMI reading suggests a broad-based decline in business
conditions symptomatic of the challenging macroeconomic conditions as
well as the extremely volatile exchange rate on the parallel market.
(This)… suggests that the level of economic activity may be weakening as
disposable income reduces and access to foreign exchange for import
activity remains challenged.”
StanbicIBTC economists contend that the
sharp rise in purchase prices can be linked to the wide gulf between
official exchange rate of N199 to the United States dollar, and the
extravagant parallel market rate that is way up north of N315. The high
road to sorting this mess is to quit blaming the fall in crude oil
prices, and check the violent depreciation of the naira. And that’s a
good way for government to avoid getting Henry Boyo’s dander up
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