Nigeria’s excess crude oil revenue has dropped by five per cent as oil prices fell to $49.26 per barrel yesterday, posing fresh threat to implementation of the yet unsigned 2017 budget and the exchange rate of the naira.
Nigeria’s excess crude oil revenue has dropped by five per cent as oil prices fell to $49.26 per barrel yesterday, posing fresh threat to implementation of the yet unsigned 2017 budget and the exchange rate of the naira.
According to report by Vanguard, the nation generated about $114 million from the export of about two million barrels per day in May, 2017 when prices stood at $57 per barrel.
But the revenue dropped to $108 million yesterday when oil prices crashed from over $50 per barrel to $49.29 in the global market. This development translates to reduction in accretion to the nation’s external reserves, hence reduction in dollar supplies, which undermines the stability of the Naira exchange rate. Though the Naira appreciated to N375 per dollar in May, external reserves however fell by $535 million during the month to $30.32 billion.
The fall in oil prices and excess crude oil revenue also poses a fresh threat to the implementation of the Federal Government’s N7.28 trillion 2017 budget which was based on $44.5 per barrel reference price.
President, Muhammadu Buhari had stated while presenting the budget to the National Assembly that the 2017 Budget was based on a benchmark crude oil price of US$42.5 per barrel; an oil production estimate of 2.2 million barrels per day; and an average exchange rate of N305 to the US dollar.
Government will be hopeful that oil prices remain within the budget benchmark, to avoid disruptions to interim implementation plans.
