By Obinna Chima
Notwithstanding the volatility recorded by crude oil price since December last year, the federal government has reiterated that there was no cause for alarm about the benchmark price for crude oil in the 2019 Appropriation Bill
The government had proposed a $60 per barrel oil price for the proposed budget that has been laid before the National Assembly.
The benchmark Brent crude price yesterday closed at $61.51 per barrel and there are prediction that the price might remain weak.
But speaking with journalists in Lagos, the Special Adviser to the President on Economic Matters, Dr. Adeyemi Dipeolu, there was no cause for alarm about the crude oil benchmark.
“I know it (crude oil price) fell in December 2018 to below $60, but the 2019 budget hadn’t started yet? But in that same year, it was at $80 per barrel? So, we are looking at the average.
“Secondly, oil prices are inherently volatile. A lot of people, and they may even be wrong, are projecting $65-$70 per barrel.
“At the time the budget was drawn up, who would have taught oil price would drop to $60 per barrel? Nobody. Don’t forget that the budget was drawn up when crude oil price was about $80 per barrel and it was that leeway that we gave ourselves to still be above $60 per barrel.
“I check the oil price everyday this year, it has not fallen below $60 per barrel,” he explained.
According to Dipeolu, the challenge for policy marker in the country ought to be how to meet the country’s OPEC quota.
With Egina coming on stream, that would be another $200 barrels, taking the country’s daily crude oil production to about 2.3 million barrels per day.
“So, I am not worried about the crude oil benchmark in the budget, because it doesn’t look over ambitious. We were already 2.1 barrels last year, including condensate, and if you remove condensate, we are doing about 1.76 million barrels per day, and that is part of our OPEC quota.
“So, I am not too worried about the oil benchmark. Ultimately, a budget is an estimate. So, at the end of the day, the parameters you used were the best figures available to you as at the time you were preparing the budget as conservative as possible.
“But the satisfaction for me would be the day we are able to say oil revenues accounts for only minimal per cent of Nigeria’s revenue.
“The day we begin to improve tax administration. So, we need to ramp up our revenue and then we can begin to de-emphasise our dependence on oil,” he said.