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Coronavirus: Fall In Oil Price Dangerous to Our Country’s Survival


Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari has that since Nigeria’s major source of income is being threatened by the coronavirus, bad days ahead of the country.

He specifically warned that everyone should prepare for more trouble ahead following the crash in oil price due to coronavirus.

Two days ago, coronavirus crashed crude oil price to $30 per barrel, the incident that triggered national budget destabilization in Nigeria.

Kyari, who spoke in Abuja on Wednesday during a consultative roundtable meeting organised by the Central Bank of Nigeria said we should prepare for the worst.

Speaking in Abuja on the theme: “Going for Growth 2.0”.Kyari said: ”There are over 12 LPG cargos stranded globally because they have no hub because of the abrupt collapse in demand associated specifically with coronavirus.

“It has also hit other sectors from the production stage which is the liquid crude. And as today with the Nigerian crude, we have 50 cargoes that have not found landing it means the traders have purchased it but they don’t know how to take it.”

He urged Nigerians to brace up for harsh economic conditions in months ahead, even if the price of crude oil in the international market jumps to over $50 from the current $30/barrel.

Kyari while dissecting possible scenarios confronting the Nigerian economy said: “while Nigeria’s oil-producing competitors produce oil at a relatively cheaper cost, Nigeria’s production cost was still on the high side.”

According to him, Iraq dropped their price by $5 and Saudi Arabia by $8 in some locations. So, when your crude oil sells at $30 and you’re dropping it by $8, it means that in the market, you’re selling it at $22.”

That he said “is a huge problem that can be accommodated in some production environment like in Saudi Arabia. Today, the best of our production system is $15-17 a barrel, there are many countries whose cost of production is $30 and we’re one of them. So, when the price now goes to $22 and we’re producing at $30, we’re out of business.”

Also at the event, the Central Bank of Nigeria (CBN) said it is considering adding sanitisers to the lists of products on foreign exchange restriction.

The CBN Governor, Mr Godwin Emefiele said the country must take advantage of the crisis created by Coronavirus by ensuring diversification of the economy as being driven by the present administration.

Wondering why Nigerians do not patronize made in Nigeria sanitisers, Emefiele urged owners of patent outlets and pharmacies to buy such products being produced in the country.

He stated that “giving the impact of coronavirus, I heard some countries are trying to ban the export of some pharmaceutical products, we must look inward at this time. CBN is also working to support the pharmacy and pharmacology industry.”

He also stated that the apex bank will intervene heavily in the health sector following the outbreak of COVID-19.

The bank’s intervention would be in the area of diagnosis and surgery pointing out that this would reduce the foreign trip to oversee countries being embarked on by Nigerians in search of medical attention.

Emefiele explained that the CBN has decided to support the government by helping to develop specialist hospitals across the country.

He said relying on crude oil since in the 1970s had become a problem for the country hence something must be done to change the trend.

On his part, President, Dangote group Mr Aliko Dangote lamented Nigeria penchant for importation.

READ ALSO: Why CBN Will Soon Devalue N400 To One Dollar Say, Analysts

He said was shocked to hear that Nigeria Customs Service received N1.35 trillion customs duties last year. This he said “simply shows that the economy is not working because if it is, customs won’t take that as customs duties.

The crash in oil price he said has become very important for us to have a solution and the solution is by diversification of the economy.

In his words, “there are two ways to diversify the economy which can be driven through agriculture and manufacturing. However, to achieve inclusive growth, there must either be backward integration or import substitution.”

He noted that “it is disturbing that we as a country cannot produce what we consume. Only in 2019, our exports were about $42billion which is not sustainable and we cannot continue like this. To have a Population of 200million and grow at 2.7% cannot be sustained” he said.


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