Chineme Okafor in Abuja
Following Nigeria’s descent into an economic recession that has been widely ascribed to low turnover in the oil and gas sector, experts in the sector have identified ways the federal government can quickly get the economy out of recession.
The experts who spoke with THISDAY yesterday in Abuja, explained that Nigeria could be long on the recession if the federal government fails to adopt a sensible approach to solving the situation.
They noted that since the recession was basically created by the country’s oil and gas sector, it would only be natural that the sector is buoyed to help other sectors increase their productivity using its resources as feedstock for capital and not recurrent spending.
They however added that since the government cannot come up with the huge financial support needed by the oil and gas sector, it can augment by taking measures such as passing the Petroleum Industry Bill (PIB), privatising the country’s refineries and completely taking its hands off fixing prices in the downstream sector.
One of the experts, Dr. Tim Okon who was a senior official at the Nigerian National Petroleum Corporation (NNPC) but now oversees the International Institute for Petroleum Energy Law and Policy (IIPELP) told THISDAY that the government would be making a mistake if it is hoping on an increase in prices of oil to get the country out of recession.
“It is actually the oil and gas industry that is creating the basis for the recession. Part of that is due to the fact that projects that the sector would have done are no longer going to be done.
“After many years of asking Nigeria to adopt sensible policies, and governments refusing to, the outcome is what we have today – a recession,” said Okon.
He stated: “The money we could have saved during all the excess crude oil withdrawals are no longer available to balance the budget.
“The long term impact is simply that Nigeria cannot rely on hydrocarbon money as income. We need them as feedstock for the industries. If we privatise the refineries, open up the market, remove subsidy so that people can process hydrocarbon in Nigeria and remove all the price fixing, then the economy will get back and its industries enjoy low prices of oil.”
Okon said: “The age of oil is ended and with oil as income, Nigeria will never be in a position to have huge money to spend, so government need to be less reliant on oil as income.”
Similarly, the President of the Nigeria Association for Energy Economics, Prof. Wumi Iledare stated that one way out of the recession was for the government to quickly pass the PIB and free the sector from its stronghold.
Iledare said: “The reason we are in recession is because of the downturn in the petroleum sector and the only way to turn it around is to turn the petroleum sector around, meaning that the government need to think quickly on how to pass the PIB.”
He stated: “Some of these things are the stupidity in the fact that we have not passed the PIB after so m any years and three attempts. Government need to put action on this.”
Iledare noted that with the prices of oil and Nigeria’s production down, the government cannot fulfill its planned expenditure on infrastructure unless it opens up the petroleum sector for investment through the PIB
“It has to find a way to invest in the petroleum sector but it has no money because we are not producing at the level we are producing and also at a low price which makes it a double jeopardy. “Price of oil are low, production is low, there is nothing the government can do unless its increases spending in infrastructure. It has to now wake up and do the right things. What it needs to do is glaring, otherwise, we have not seen anything yet,” he said.