The commencement of naira for crude sale (3)

An African adage says that “the person that fails to recognise the point from where he started getting drenched under the rain obviously shall walk past beyond his in-law’s residence without recognising he did”. Nigeria’s economy, honestly, has been in a tumultuous condition for quite a while (an upward of four decades or more), since the days of the government of Shehu Shagari/Alex Ekwueme, when austerity measures were declared in February 1982. To give full details on our local currency worth, value, and its exchange rate to the United States Dollar (USD), the nation’s productivity profile, the consumer price index, commodity/food pricing and in general, the national economic efficiency, is a topic for another day. 

However, the state of the nation with respect to economic stability, security situation, job opportunities, and high employment rate in the world’s most populous black nation, with her irresistible demographic potentials in international trade, is today heading back to her former glories, especially now that the Nigeria National Petroleum Company Limited (NNPCL) has repented and forsaken its wrong doings and its very poorly managed corporate governance; to end importation of petrol.

Going on memory lane in the history of the nation’s oil industry in the international oil market, the reckless management of the policy on importation of refined petroleum products (with its notoriously acclaimed fuel subsidy programme), completely ruined the nation’s once rosy economy to the point that the naira’s exchange rate tumbled from a lofty height of N0.46/USD in the ‘70s, to the current sorry situation of N1,730/USD within five decades. How has the mighty fallen? 

The oil and gas sector, indeed, the petroleum subsector of the national economy, no doubt, plays a very strategically important role in the economic wellbeing of the nation. This fact is overwhelmingly supported by historical records of upstream operations on crude oil exports/sales and its huge contributions to the nation’s foreign exchange earnings. It further elucidates the damaging impact the total neglect of local refineries has dealt on the economy. The economic wastes as a result are manifested in the huge pressure and an unbearable daily demand stress on foreign exchange for refined products imports into the country. 

For instance, an analytical study of the statistical data of top ten Nigeria imports in the first quarter of 2021, according to the National Bureau of Statistics, clearly indicated refined products imports to top the list with N687.7 billion, or 32.05 percent of the value of the entire top ten imports; as against the next three in their descending order: pharmaceuticals, N412.7 billion; wheat, N258.3 billion, and used vehicles cars, N174.2 billion. This expressly exposes the stress and burden the daily domestic consumption of refined products through foreign exchange demands places on the nation’s foreign reserves.

The strategic approach towards actualising this unique homegrown backward integration economic policy engagement should look inwards to significantly reduce the consumption of imported goods, generally. The effective means of actualising this project with our foreign trading partners on imported goods, calls for leveraging on existing deep business relationships without any form of business interruption; by capitalising on Nigeria’s irresistible huge market advantage, to reshape the nation’s international trade roadmap, redesign the schedule of engagements among all the respective big time foreign trade merchants operating in Nigeria, to continue without any business interruptions by shifting their production activities from their respective home countries to Nigeria, and operate locally in the available export processing zones (EPZs) within the country. With the above template and the mutual understanding of overseas manufacturers and their Nigerian big time importers and highly valuable customers on all forms of goods and commodities that are significantly consumed in the huge Nigerian market, is a win-win approach.

On the aspect of optimising opportunities in the downstream operations, to contribute in improving the value and worth of the local currency, by encouraging more local refining activities dealing in naira denominated operations, the refined products scarcity in Nigeria that started in the mid ‘80s, shall definitely become a thing of the past with the present refined products’ capacity of locally self sufficient energy services about to be efficiently offered in the oil sector, by the likes of Dangote Refinery. 

Now that the Independent Petroleum Marketers Association of Nigeria (IPMAN) has come on-stream to lift refined products directly from Dangote Refinery, a refining facility that has the capacity to adequately and effectively satisfy the products’ daily domestic demands; and with the supply of the feedstock/crude oil to be sold in naira; it would be a wonder why the current economic hardship due to high inflation, and hunger in the land, not be drastically reduced for Nigerian citizens. 

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