The Centre for the Study of the Economies of Africa (CSEA), a think tank research firm focusing on activities in Africa’s economies, has urged the Federal Government to strengthen security in the oil producing areas as a step towards improving productivity and halting the dwindling revenues from the nation’s hydrocarbon resources industry.
The think tank experts made this recommendation in the latest Nigeria Economic Update Issue 46 sourced by our correspondent on Tuesday.
Specifically, the CSEA analysts advised that investments in and deployment in the relevant technologies and improved collaboration with the oil producing communities should be prioritized by the government in its efforts geared towards improving oil sector’s contribution to the nation’s Gross Domestic Product (GDP) on a sustainable basis.
Researchers in the Centre had noted that estimates from the Organization of Petroleum Exporting Countries (OPEC) showed that Nigeria produced about 1.25 million barrels per day (mbpd) in October 2021, below the budgeted crude oil production level of 1.86 mbpd in the 2021 budget.
They also observed that crude oil production recorded a decrease of 9% year on year from 1.3 million in October 2020 to 1.2 mbpd in the month under review just as on a month-on-month basis, Nigeria’s total oil production decreased slightly from 1.25 mbpd, decreasing by about 200,000 bpd.
According to the CSEA experts, the decrease in output is primarily due to vandalism and bunkering in oil-producing regions, which causes damage to oil installations.
The research organization further noted that as oil production level falls, government revenue falls, thereby shrinking the fiscal space and leaving the government with the option of borrowing to invest in vital sectors of the economy.
This is even as the organisation’s experts pointed out that the fall in oil output level had continued to put pressure on the value of the naira, as crude oil remains Nigeria’s primary export.
On the way forward, the CSEA advised: “To actualise the revenue projection from the oil sector, the government in collaboration with security agencies must strengthen relations with host communities in securing oil installations.
“The government can also leverage on technology by utilising satellites with geo information systems to effectively monitor pipelines”, the think tank added.
