Amid indications of brighter outlook for oil producing countries in terms of revenue earnings in the months ahead, economic researchers and consultants at the Centre for the Study of Economies of Africa (CSEA), have advised the Federal Government to incentivize investments in the hydrocarbon resources industry to enable the country benefit from the rising global oil prices.
The economists, in the firm’s latest ‘Nigeria Economic Update Issue 16’ released on Monday noted that based on the OPEC’s monthly report on crude oil movement, the price of crude oil rose significantly in the global market in March 2024.
According to the researchers, in particular, the OPEC Reference Basket increased by 3.7 percent ($2.95) from $81.23 per barrel in February to $84.22 per barrel while the monthly averages for ICE Brent and New York Mercantile Exchange (NYMEX) Western Texas Intermediate (WTI) rose from $81.72 per barrel and $76.61 per barrel in February to $84.67 per barrel and $80.41 per barrel, respectively in March.
They noted that the Nigeria’s Bonny Light also increased, month-on-month, by 2.6% percent ($2.21), rising from $85.65/barrel in February to $87.86/barrel in March, attributing the rise in crude oil prices is majorly a result of increased global geopolitical tensions which also leads to very high expectations of a more constrained supply-demand dynamics for the rest of 2024.
The experts projected that the increase in crude oil prices was expected to benefit oil-producing countries in the form of higher foreign exchange earnings and government revenues that can be used for infrastructure projects and social welfare programmes.
However, they pointed out that this scenario posed a complex situation for Nigeria, which operates as both an importer of refined petroleum products and an exporter of crude oil.
While noting that although the government is expected to receive more revenue, the CSEA analysts maintained that cessation of Premium Motor Spirit (PMS) subsidies, high petroleum product landing costs, and the fluctuation in the currency rates may cause citizens to pay more for refined petroleum products.
Hence, they advocated that “it has not been more pertinent than now for the Nigerian government to provide systems for local production of petroleum products so that benefits from crude oil resources can be fully realized.
“The recent opening of the Dangote Refinery is a step in the right direction, and other investors should be incentivized to invest in the downstream oil industry”, the experts added.
