Nigeria not benefitting from the high global prices of oil – NESG

Nigeria is not benefitting from the high global prices of oil, the Nigeria Economic Summit Group (NESG) and Oando Plc have said.

Low oil production rate, theft and pipeline vandalism are the main factors which deny the country the benefits, they said.

As a result, fiscal pressure is imploding because of declining revenues and soaring public debt.

The NESG, in a communiqué issued at the end of a meeting of its Board of Directors in Abuja yesterday and signed by the Board Chairman, Asue Ighodalo, said declining investment and divestment, high cost of production and a harsh operating environment contributed to denying the country of the benefits that would have accrued to the country.

Oando shareholders, at the end of the Annual General Meeting in Lagos, urged the government to take more decisive actions to tackle the problem of oil theft.

They bemoaned the negative impact of oil theft and insecurity and called for cohesive actions to tackle the menace.

The shareholders lamented that acts of vandalism, banditry, terrorism and other crimes have adversely affected the economy.

They implored the government to partner with various stakeholders both in the public and private sectors to resolve the issue which they described as crippling the economy.

The NESG said: “Nigeria is not appropriating the benefits of high global prices. As a result, fiscal pressure is imploding because of declining revenues and soaring public debt.”

Ighodalo drew attention to the recent outcry of the Minister of Finance that the cost of debt servicing has surpassed the Federal Government’s retained revenue as total public debt continues to rise.

The NESG chief said the growing deficit meant that Nigeria would rely on borrowing to finance the 2022 budget, noting that despite increased budgetary allocation to defence and national security, insecurity has not abated.

“Despite some changes in the leadership of the national security apparatus, conditions have not improved.

“There is hardly any need to itemise the adverse impact of insecurity on food prices, productivity, ease and cost of doing business, investor confidence and national pride,’’ Ighodalo said.

He added that as a policy think tank, the NESG would continue to offer policy advice to any government in power, in the national interest.

He called for steps by the government to tackle revenue challenges that created room for the rising national debt, pointing out that the “government must take decisive action to tackle its revenue challenges which cannot be divorced from leakages through oil theft, difficult operating environment for businesses, and lack of innovation in tax collection.”

He added: “The challenges have resulted in low accretion to the nation’s revenue base.

“We strongly believe these leakages have continued unabated because of the absence of sanctions and ineffective tax systems.

“We must return to the path of debt sustainability in the face of dwindling revenues, not to create a debt burden for future governments and, indeed, future generations.