Paul Ogbuokiri and Ajibade Akinola 
Rising oil prices naturally should benefit the country in many ways, with foreign reserves increasing and the Federal Government being able to commence savings of the excess revenue above the 2022 budget benchmark, experts said yesterday.
They were reacting to the on-goingface-off betweenRussia and Ukraine, which has sent crude oil prices surging above $104 for the first time in seven years. Professor Emmanuel NnadozieistheExecutiveSecretary of theAfricanCapacity Building Foundation (ACBF), an educator, economist, who, reacting to the report credited to the Minister of Petroleum Resources, Mr. TimipreSylva, that the increase in the prices of crude oil in the international market is not good for the country, noted that increase will be beneficial to the Nigerian economy and solve the nation’s foreign exchange liquidity problem.
He said: “It is time for the country to try to get its priorities right and invest its revenues in sectors that will grow the economy. The problem I foresee is the country’s heavy dependence on foreign refined petroleum products. So what will happen is that as the price of crude is increasing, the landing price of the refined petroleum products will equally start to increase. Asthegovernmenthasundertaken to subsidise petrol, the subsidy will be increasing as theprice of crudeis increasing and may surpass the government’s budget.” Also speaking, a social entrepreneur and UK-trained economist and information technology expert, Oreoluwa Somolu Lesi, insisted that the increase in the oil prices will give the Nigerian economy a big boostasitemergesfromthe setbacks caused by COVID-19 pandemic. She noted that the economy will grow rapidly this year if the expected windfall lasts a bit longer.
She, however, warned that the governmentmust bemore careful this time round in deploying the windfall to the productivesectorsof theeconomy. ButtheChief ExecutiveOfficer, IIPlc, Mr. TunjiOyebanji, said the rising price of crude oil at the international market comes with attendant pains. According to him, Nigeria needs not be over excited about the recovery of the market, as the development is going to have negative impact on the economy. He said: “It is good that the price of crude oil has reached $104 per barrel. In fact, it was a welcome development, as the Federal Government would have enough money for operation.
“However, the development means that the government would pay for more subsidies. Once the price of crude oil goes up, it is normal thing for the prices of the petroleum products to increase as well.” Similarly, the Managing Director, Petrocam Nigeria Limited, Mr. Patrick Ilo, said thatthegovernmentmustlook formoremoneytopaysubsidy, stressing that the N2.7 trillion set aside by the Federal Government might not be enough for subsidy should the crude price remain high for a sustained period of time. Timipre Sylva had told Bloomberg Television, on Thursday, that the increase in the price of crude is not good forthecountry, addingthatNigeria’s comfort zone in terms of oil prices was between $70 and $80 per barrel. The global oil benchmark, Brent crude, rose over 5 per cent to trade at $105 a barrel with escalating tension between Russia and Ukraine yesterday.
But the minister insisted that Nigeria was not gaining anything from the soaring prices. “I’m hopeful the prices will move around, maybe $80, maybe $70. We are hoping it will come down to somewhere around $70 to $80, which will be sustainable for us by the end of the year,” he said. Last year, Nigeria agreed to voluntarily cut its daily crude oilproductionby939,000barrels between January and March after a meeting with the Organisation of Petroleum Exporting Countries (OPEC) andits allies. Sylva said the inability of Nigeria to activate the oil wells it shut down when OPEC instructed producing countries to cut production as well as the lack of investment in the upstream sector is affecting the country’s ability to increase production.
“We are working hard on that (production increase). What happened to us was the fact that we had to cut back at the time, and, of course, in such a way you can’t cut back mathematically,” he said. According to the minister, a lot of additional investments would be needed to ramp up production, but he lamented that foreign funding was fizzling out from the industry.
