Economic formula of local refining influencing Naira rate

Fix this economy and manage public affairs without further, undue overbearing economic complexities that continue to becloud transparent representative governance. This remark is not necessarily an overstatement, rhetorically; nor does it sound like rocket science. It is a feasible, doable and actionable stewardship expected to be rendered by those in places of authority and power in a normal and functional democratic economy. Some Nigerians definitely will react by passing pessimistic comments, characterised by low-morale remarks like, “it is easier said than done”. Such a view, if made by anybody, is permissible, in the sense that people’s views are normally made from diverse and respective perspectives, and ought to be respected. The only convincing point that supports my personal view is substantiated by 15 years of strong and steady insistence on my argument over issues of energy production, marketing and consumption in the oil and gas industry of the economy. I may be wrong in this view because the country has a lot of qualified, certified and tested technocrats, and experts from the related and relevant professions that handle economic, financial and political issues (in their official capacities). Such personalities may technically have superior procedures and processes to solving these challenges facing the nation. However, everyone has been around in the system, and yet our economic issues got to this stinking and very embarrassing level; a country that is endowed with natural and human resources (including crude oil and gas).

The news of a $3 billion loan secured by the Nigerian National Petroleum Company Limited (NNPCL) with the aim of stabilising the naira has attracted some public comments among every class of Nigerians in the society. No matter the good that may be attached to its liquidity impact on foreign exchange it portends as ingested in the economy, that would ease off stress and pressure over the local exchange rate; so what? I beg to differ completely with such a school of thought, on the basis that such borrowed funds on their own merit, are an embarrassing financial stress that would not impact on productivity in a country that is already labelled a “consumer nation”. Refining locally (the most effective means to efficiently generate foreign exchange), has continued to pose the major challenge that those in charge have completely decided to ignore, and they go aimlessly, beating about the bush (abandoning the substance of the matter). If I may ask, what has happened to the earlier borrowed $1.5 billion in 2021 for rehabilitation of the 150,000 and 60,000 bpd refineries in Port Harcourt (have they started operations)? One starts to wonder if such action was taken in the aftermath of President Tinubu’s assurances that the price of petrol will not be increased again under his watch, which has immediately attracted a section of the citizens who have been speculating that his statement amounted to reintroduction of petrol subsidy into the economy, through the back door (which to my mind, may not be as they suspect). The truth about the whole development is that most Nigerians have completely lost confidence in the information that filters from those in governance, based on the fact that too many times in the past, they’ve been embarrassingly fed with a pack of lies and all manners of false reports/information, to their greatest surprises.

Economically, we have all seen where we are today (with the free fall of the naira). Everyone of us is shamelessly busy, contributing and discussing fuel subsidy removal (with hopeless and frustrating debates on cushioning the effect by palliatives), and the way out of the current economic mess; the high cost of living, high inflation rate, and very unsustainable volatile consumer-expenditure without commensurate means of replacement packages attached to salaries, other remunerations and wages. The bottom line of all of these economic challenges, rests on total lack of local value-addition on our God-given “black gold” (local refining of the crude oil). No other reason! If the fuel subsidy removal and deregulation on refined products had come much earlier than now (like 13 – 15 years ago), the nation wouldn’t have been going through this present harsh economic experience over the value of the naira that is now exchanged at N1,000/$. The economic impact would not have been this severe with the toll it now takes on every Nigerian, if precautionary measures (fiscal, monetary and investment policies) had been timely effective. All of us now experience the influence of local refining over the integrity status of the local currency exchange worth, based on the mounting pressure on dollar demand to import refined products. Every other economic sector is as important but the oil and gas sub-sector is significantly highly influential in our “mono-export economy”. No productivity, no foreign exchange accruals from exports of finished products. Self sufficiency and a net exporter on refined products would have been the economic status to solve this current problem of weak and tumbling naira exchange rate. I am happy that the present economic reality has now exposed the outrageous claims over the daily domestic demands of petrol, which has now “realistically tumbled” from 67 million litres (as claimed by the oil authorities), down to 40 million litres, and presently further down to about 23 million litres. Judging from the economic formula of GDP/National Economic Efficiency (NEE); it is the fuel imports component that ruined this economy (based on its significant ratio of total imports). The formula of NEE = Investment + Government Expenditure + Consumer Expenditure – Imports; where the imports component far outweighs all others, brings the economy/NEE to a negative value; which amounts to a distressed economy.