As at early Wednesday morning, Brent Crude was trading at $54.75 barrels per litre. This is below the $57 per barrel benchmark on which Nigeria’s ambitious N10.6 trillion 2020 budget was based. The Coronavirus threat in China has been blamed for the dip in oil prices.
The situation portends serious negative economic implications for the most populous black nation, which depends majorly on oil exports for its revenue realisations. At the moment, the country is experiencing a revenue shortage and a budget deficit of 1.52% to the estimated GDP.
There is more to the problem: Not only is crude oil price low, but Nigeria is also being restricted from meeting the 2.18 million barrels of crude per day on which the 2020 budget was based. The restriction is due to OPEC’s December output cut of 1.7 million, which was taken in a bid to forestall crude inventory buildup, which is not favourable to prices.
There is probably more to worry about because the virus is yet to be contained. China is among Nigeria’s top ten foreign trade partners, buying crude oil which it uses to power its industries. But the Coronavirus threat has resulted in many Chinese companies being shut, meaning that there is less fusil fuel consumption in the country. This is not good for a country like Nigeria that needs to export crude to China in order to earn foreign exchange.
Another issue to worry about is the likelihood of further output cut for OPEC countries. A recent report by CNBC noted that the oil cartel (I.e., OPEC) is planning a large production cut in order to cushion the effect of the price collapse, which the Coronavirus has occasioned.
Nigeria is an OPEC member. As such, the country is required to abide by OPEC’s output, which in turn means that it could soon be exporting lesser barrels, far below its 2020 budget benchmark.
In the meantime, Nigeria is looking to raise money through various means, including exploring tax options that were hitherto unexplored. Nigeria is also borrowing money in a bid to finance the budget, with the Finance Minister insisting that the country does not have a debt problem despite the rising debt.
To check the current crude oil prices, click here.
FG announces schedule for 4th evacuation flight from the USA
The evacuees will be expected to present an original COVID-19 negative test result not older than 14.
The Federal government has approved the fourth evacuation flight for Nigerians stranded in the United States of America for July 28.
According to a statement that was signed by the Consulate General of Nigeria, the Ethiopian Airline with flight number ET509 will depart Newark Liberty International Airport, New Jersey on Tuesday 28 July 2020 by 21:15hrs and arrive Nnamdi Azikiwe International Airport, Abuja on Wednesday 29 July 2020 by 13:25hrs.
“All prospective evacuees duly registered with any of the three Nigerian missions in the USA should purchase their one-way tickets at a cost of $1250 for economy class and $2800 for business class for adult/child fare including all taxes with the usual percentage reduction for infants under 2 years,” the statement read.
In line with the earlier announced protocols from the Nigerian Presidential Task Force on COVID-19, the evacuees will be expected to present an original COVID-19 negative test result not older than 14 days on the day of departure at the airport.
There will also be a temperature check at the airport, and any intending evacuee with a body temperature above 38°c or any symptoms suggestive of COVID-19 will not be allowed to check-in.
Evacuees are also required to wear a face mask as a matter of necessity and be in possession of hand sanitizer for intermittent use during the flight, while also adhering to the instructions of the
Furthermore, all returnees are enjoined to adhere strictly to all instructions of Port Health Services (PHS) officials and observe other entry screening protocols on arrival.
Notice on the FOURTH Evacuation Flight from the United States of America to Nigeria. #StayHomeSaveLives #COVID19Nigeria #COVID19 #PTFCOVID19 @NigeriaGov @DigiCommsNG @USinNigeria @FMICNigeria pic.twitter.com/NFVWWDGgSx
— Geoffrey Onyeama (@GeoffreyOnyeama) July 10, 2020
Covid-19: British High Commission to resume visa application in Nigeria
Nigerians who want to visit the UK can do so as soon as international flight operations resume.
The British High Commission in Nigeria has announced plans to resume visa processing in the country. It revealed that it will soon begin receiving visa applications from Nigerians who want to travel to the United Kingdom (UK).
This was disclosed in a public statement by the British High Commission in Abuja on Thursday, July 9, 2020.
It said that Nigerians who want to visit the United Kingdom can do so as soon as the international flight operations resume in the country. The statement said:
“We know there are many Nigerian nationals hoping to be able to travel to the UK when flights resume, both for employment and to see family members.
“UKVI are working closely with TSL contact, our commercial partner, to reopen visa application centres that were suspended due to COVID-19. UK visa application centres are reopening in phased manner globally when it is safe to do so and when we can operate an effective service.
“TSL contact are putting appropriate measures in place and working hard to reopen in Nigeria. We will share details of when VACs will reopen soon,”
READ MORE: US to stop issuing visa for Birth Tourism
It can be recalled that the Federal Government had shut down the airports to both domestic and international flight operations in March as part of measures to contain the spread of the coronavirus disease.
Following the gradual resumption of domestic flight operations, Nigerians are expecting that international flight operations might be resuming soon.
Nigeria’s excess crude account falls to $72 million
Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.
Nigeria’s Excess Crude Account (ECA) now stands at $72 million as the country continues to grapple with an unprecedented revenue crisis not seen since the early eighties. The ECA account has now fallen by about 98% within the last 5 years.
The information on the excess crude account was revealed by the Minister of Finance, Zainab Ahmed in a National Economic Council Meeting during the week. The ECA is a savings account retained by the Federal Government and is funded by the difference between the market price of crude oil and the budgeted price of crude oil as contained in the appropriation bill.
There were major concerns last November when it was reported that the ECA balances held just $324.5 million one of the lowest balances recorded at the time. At $72 million the ECA is in low territory highlighting the effect of the fall in crude oil prices this year. Crude oil prices have crashed to sub-zero in March and have risen back o just over $40/barrel in recent weeks. However, it still remains low from Nigeria’s previous budget benchmark.
ECA in the news
About a year ago Nairametrics reported Nigeria’s Excess Crude Account has dropped to $480 million. This is as controversy continues to trail the $1 billion military spendings which were withdrawn from Nigeria’s Excess Crude. According to the Central Bank of Nigeria’s annual report for 2018, Nigeria’s crude excess account fell from $2.45 billion in 2017 to $480 million as of December 2018.
Just 5 years ago (August 2015) the ECA stood at $2.2 billion. This was the early days of the Buhari administration. It was $3.6 billion in February 2014, one of the highest balances on record. That same month, at its monthly FAAC, the government agreed to remove fuel subsidy from its books. Fuel subsidy is currently being borne by the NNPC.
The Controversies: Last year, the federal government under President Muhammadu Buhari was accused of mismanaging the country’s Excess Crude Account especially the $1 billion reportedly spent on military equipment.
- The National Security Adviser (NSA) retired Major General Babagana Monguno Gen. Babagana was quoted to have disclosed that he was not aware of the whereabouts or disbursement of the $1billion drawn from the ECA by the Buhari presidency in 2017 for security purposes.
- While controversies trail the statement credited to the NSA, with many describing it as diversion of public funds, the Presidency provided some explanations.
- Responding to the allegations, Senior Special Assistant on Media and Publicity, Garba Shehu, disclosed that various procurements had been made for the purchase of critical equipment for the Nigerian Army, the Nigerian Navy, and the Air Force, contrary to the allegations.
Nigeria’s ECA in retrospect: In Nigeria, there are two Sovereign Wealth Funds: the Excess Crude Account and the Nigeria Sovereign Investment Authority (NSIA). Note that these two are funded by the savings earned when oil prices are at peak.
- Hence, as a larger chunk of revenue is appropriated for ECA and NSIA, the country’s external reserves are likely to fall.
- Note that the sovereign wealth fund was established to address the controversies surrounding the Excess Crude Account.
- The fund is usually expected to generate revenue to meet budget shortfalls in the future, provide dedicated funding for the development of infrastructure and saves for future generations.
ECA depleted by 98% in 5 years: A closer look at the various annual reports of the Central Bank of Nigeria shows that Nigeria’s excess crude account has now fallen by a whopping 98% in just 5 years.