Oil windfall from Russia-Ukraine crisis: Is this another Nigerian national cake?

EnergyDay Editorial

As unfortunate as the ongoing crisis between Russia and Ukraine is, oil-producing countries including Nigeria are likely to capitalise on the gains due to the United States and Europe’s alternative search for their energy needs.

As more sanctions are being imposed on Russia over its invasion of Ukraine, Nigeria and other major oil producers are most likely to be courted by the West to meet their energy needs. This new development is likely to usher in another era of financial oil windfall as Nigeria’s economy will record buoyancy.

Remarkably, Nigeria’s Bonny light on Friday, February 25, 2022, rose to US$101 per barrel above the prices of Brent crude and US headline West Texas Intermediate (WTI) crude that were traded for $92.09 and $97.54 respectively, for the first time since July 2014. This price increase as predicted by Goldman Sachs reports is expected to be progressive as the war begins to wane.

It is now a challenge for the economic managers in Nigeria not to fritter away these short-term gains.

At EnergyDay, we demand “Resource Accountability” by President Muhammadu Buhari against the backdrop of failure by successive governments to account for revenues received, each time, we had windfall experiences on crude oil export receipts.

We, therefore, urge the President to demonstrate the authentic value of his credibility as a prudent leader with a distaste for profligacy. Beyond rhetoric and the usual false assurances given in the past to Nigerians on resource management, historical records reveal that our past leaders, altogether, served as cover for the perpetuation of corruption in our country.

In less than two years from now, history will judge this administration and its performance to deliver on its key promises to the Nigerian people, but in a nearer perspective, we are addressing the issue of excess income from crude oil sales.

In 1973, Nigeria’s former Head of Government, Gen Yakubu Gowon, made an infamous but profound remark that our problem “wasn’t about the ability to earn money but how to spend it.” He said this at a time when Nigeria’s crude oil came into the limelight as a global commodity on hot demand. Yes, he was right, but we thought he was wrong.

In 1994, when former President Ibrahim Babangida held sway as the country’s President, Nigeria earned a staggering sum of US$12b as windfall from the Gulf war crisis. The records of how the money was spent is shrouded in mystery and it seems, there is an instruction to the public to keep quiet on this matter.

In 2016, former President Goodluck Ebele Jonathan, presided over the affairs of the country when prices of crude oil, for the first time in history, sold above US$100 per barrel and our daily revenue was no less than US$150m. While the citizens remain impoverished, Ponzi schemes such as subsidy palliative served as smokescreen for politicians to fleece the economy and the people, that they swore under oath, to serve.

We have lost count of how much money was misappropriated, stolen, and underutilised under these administrations.

President Buhari is the Minister for Petroleum Resources and unfortunately, the mistakes of the past is still happening today, and in fact characterized by blatant disregard for accountability, financial discipline and corruption.

In 2022, we plan to spend a whopping sum of N3trillion on petroleum subsidy while we delay corrective action on subsidy removal because of ineptitude fueled by corruption. Unfortunately, we have been made to agree that there is a correlation between crude oil price increase on the international market and Petroleum subsidy obligations.

This position has been advanced frequently by Timipre Sylva, Minister of State for Petroleum, and Mele Kyari, Group Managing Director of NNPC. Therefore, it is likely that we spend what should have been the gains in excess of N3trn to fund petroleum subsidy in 2022. Is there something illegitimate about subsidy? A correlation between the scheme and the underlying dynamics of corruption?

EnergyDay joins other right-thinking Nigerians to query how many litres of Premium Motor Spirit (PMS) we consume daily and the want to also know the differential between the landing cost and subsidy, among others.

The truth really is this; it is easier for an incompetent government to successfully manage our exit from the subsidy quagmire than it is for a corrupt government. But, we want to hold our government responsible and accountable for prudent management of resources, particularly, excess revenue accruing from crude oil sales.

EnergyDay as an organisation, will be strong and persistent on behalf of the Nigerian public in scrutinizing the intent and professional conduct of public officers in managing the new wave of financial windfall, now accumulating.

Crude oil prices are again, on the upward swing, enabling Nigeria to earn significantly higher revenue than envisaged by the government in its current annual budget.

A daily windfall in excess of US $60 million is expected at the minimum, with the price tilting above US$101 per barrel for Nigeria’s premium Bonny light and other global crude oil grades. The global economy was already on the rebound before the eruptions of crisis in Eastern Europe.

Russia and Ukraine are Nigeria’s strategic partners. Both of them have been quite helpful in charting mutually rewarding economic pathways that are now tragically threatening the gains of the past while blurring the future optimisms for shared prosperity. EnergyDay feels the griefs of those on the firing line without overlooking our own domestic pains as the war rages.

Meanwhile, public expectations are high that President Buhari is strong enough to make those decisions that would navigate our country along the path to prosperity but, there are also very strong doubts suggesting the exact opposite as the unemployment rate ticks higher and as security of lives and properties assume scandalous dimension.

Over $2 trillion has been generated as revenue from crude oil in the last 41 years but with little to show for it. What is responsible for this wastage? Is it religion? Is it the tribe? Is it zoning? All may be right to an extent, but EnergyDay feels it is the national cake’s mantra where past leaders, politicians, civil servants, military generals believed the cake was big enough for them to take their share.

Instead of focusing on building a national oven, their focus was on how to share the cake.

President Buhari may yet be able to redeem the mantra that pivoted him to power. The urgent need for Change!