With crude oil prices rallying to over $90 a barrel as a result of the Russia/Ukraine spat, Nigeria needs an Oil Bonanza Directorate to channel the extra cash into diversification 

Ayo Akinfe 

[1] Over the last week, crude oil prices have risen to as high as $93 a barrel due to a combination of the Russia/Ukraine spat and the US storm. Basically, Nigeria has been thrown an unexpected lifeline

[2] In Nigeria's 2022 budget presented by President Muhammadu Buhari, economic projections were based on oil production of 1.88m barrels per day at a price of $62 per barrel. This means we are currently getting about $30 a barrel above projections 

[3] However, Nigeria has not been able to leverage the oil price rally as its crude oil production remains below the 1.68m barrels a day quota given to it by the Organisation of the Petroleum Exporting Countries (Opec), only producing 1.46m barrels a day.

[4] In the event of a full blown Russua/Ukraine war, oil prices will probably hit the dizzy heights of $120 a barrel that we witnessed during the Goodluck era. However, what plans do we have to cash in on this?

[5] Personally, I take the view that if there is conflict, this will be the world’s last oil war as the way everyone is moving away from crude will make the commodity irrelevant in global economics soon. Once upon a time, coal was the world’s most important resource but today nobody is interested in it and crude oil is going the same way. 

[6] Every major automobile manufacturer is now producing electronic cars, with most of them due to phase out petrol and diesel vehicles soon. This will bring the demand for petroleum crashing down and ultimately, the market price will become less than production costs, making crude oil an unprofitable business. As a result, Nigeria should consider this her last chance to diversify the economy

[7] With this Russia/Ukraine crisis, Nigeria has been thrown one last big pay cheque. We are in the last chance saloon and we simply have no choice other than to make the best of this last hoorah

[8] Nigeria is believed to generate about $50bn a year from crude oil sales, with about half of that going into the nation’s coffers. Joint venture arrangements, unpublished deals and blatant corruption means that a lot goes elsewhere, so as things stand, we only have between $24bn and $30bn to spend annually. This is nonsensical as we have an annual infrastructural deficit of $100bn a year and until we break that cycle will remain the poverty capital of the world. It is kind of like earning $300 but your rent and kids school fees adds up to $1,000. There is no way in the world you will be at ease no matter how judiciously you spend that money and if there is zero corruption in your household

[9] Nigeria needs to set up a special crude oil bonanza committee that will put together a list of investment projects that would generate significant income. It should also target spending in infrastructure like power and transport that will boost growth and obviously make economic diversification its primary objective. This committee should consider itself as being on a do or die rescue mission. If it fails, Nigeria may be doomed forever

[10] To make things clearer, Nigeria basically needs to set herself a date when she will stop crude oil production and work towards that. If for instance we are working towards 2050, the year we are due to become the third most populous nation on earth, we need a plan to replace oil revenue by then. I also think our landmass will need to be expanded so we need to also focus on which nations we will merge with. Nigeria has her work cut out and fortunately, we have one last chance to sort things out!