Africa’s most populated country is getting nearly nothing from its massive oil wealth.
While headline Brent-crude futures have rallied sharply in the past few weeks — growing above $30/barrel Tuesday — an excess of Nigerian oil is fetching about $10 less than that. It’s a stage that means fiscal income for the continent’s biggest economy has cratered.
“It’s now dawned on everyone throughout the nation how extreme this threat is,” stated Andrew Nevin, a partner and chief economist for Nigeria at PricewaterhouseCoopers LLP. “There’s a chance that at least for 3 to 5 years, there’s going to be no revenue flowing to the government from oil.”
Nigeria’s plight is playing out across the world: from Venezuela to Iraq and Iran, petrostates are grappling with the same bleak future — one where their prized commodity is worth a much less than it was, and the place private corporations often nonetheless want their cut.
Nigeria is faced with the dual problem of dealing with the Covid-19 pandemic itself, and a plunge within the price of crude, Finance Minister Zainab Ahmed stated in a webinar Tuesday.
Global efforts to struggle the unfold of coronavirus have pushed oil costs so low that they no longer cover the price of pumping barrels for many corporations in Nigeria — not to mention offering the federal government with essential money.
Nevin of PwC stated at a webinar on April 30 that when oil prices are at around $20 a barrel, Nigeria gets very little for its oil. The commodity usually contributes about half of the fiscal income.