- Understanding the Nigerian Economic Recovery and Growth Plan
The Federal Government on Wednesday formally launched the Nigerian Economic Recovery and Growth Plan (NERGP) to broaden its strategic objectives by restoring growth, build a globally competitive economy and accelerate inclusive growth by investing in the Nigerian people for the next three years, 2017-2020.
Here are the breakdown of the key aspects of the plan;
The federal government targets Gross Domestic Product of 2.19 percent growth rate in 2017 but expected an expansion of 4.8 percent by 2018, while projecting that in 2019 the economy would moderate to 4.5 percent before hitting 7.0 percent growth rate in 2020.
However, while the 2017 economic growth rate is achievable considering current progress, the 4.8 percent forecast for 2018 seems a bit over-ambitious given the current headwinds — especially with the unstable nature of the country’s foreign revenue and the difficulties in generating enough to aid the economy to achieve 4.8 percent growth rate just after economic downturn, cast a doubt on that possibility. Also, the restricted 41 items would have to be reviewed and non-oil sector that has consistently contributed between 89-90 percent to the economy would have to be bolstered with the right monetary and fiscal policy to aid businesses.
Another issue is the proposed increase in the federal government’s revenues from N2.7 trillion to N4.7 trillion by 2020. According to the Minister of Budget and National Planning, Udo Udoma, there is need to up tax revenue from the current 6 percent it contributed to the economy to about 15 percent — which is about 150 percent increment. This is counterproductive to the well-crafted plan as manufacturers and businesses would naturally pass on the difference to the consumers, therefore, further increasing the cost of goods, inflation rate, that the FG seek to reduce to a single digit by 2020 and impact productivity even more.
Accordingly, the federal government seeks to boost oil production from 1.4 million barrels per day (mbpd) in 2016 to 2.2 million bpd in 2017 and subsequently increase production to 2.5 mbpd in 2020. Whereas, OPEC monthly oil report released in March showed Nigeria’s oil production declined slightly in February from 1.533 million bpd recorded in January to 1.526 million. Making the nation the second-largest oil producer in Africa after Angola recorded 1.649 million bpd for the same month.
Therefore, for Nigeria to achieve 2.2 million bpd oil output in 2017 as projected in the NERGP, the country would have to start producing above 2.2 million pdp henceforth and up its oil rigs from the current 26 to about 34 recorded in 2014. Which is unlikely given global oil glut that has plunged both the oil prices and investments in new oil and natural gas projects.
This is likely to affect the proposed improve oil revenue and further damp other financial projections on the NERGP.
Overall, the NERGP remains the only broad economic plan in recent time. However, it failed to converge both the monetary and fiscal policy succinctly enough to address some salient issues that have been confronting lacklustre growth, low productivity, poor job creation and weak consumer spending. Rather, the emphasis was on high taxes in an economy that is looking to attract foreign investors and improve ease of doing business.
Nigeria’s Petrol Imports Decrease by 1 Billion Litres Following Subsidy Removal
Nigeria’s monthly petrol imports declined by approximately 1 billion litres following the fuel subsidy removal by President Bola Ahmed Tinubu, the National Bureau of Statistics (NBS) reported.
The NBS findings illuminate the tangible effects of this policy shift on the country’s petroleum importation dynamics.
Prior to the subsidy removal, the NBS report delineated a consistent pattern of petrol imports with quantities ranging between 1.91 billion and 2.29 billion litres from March to May 2023.
However, in the aftermath of Tinubu’s decision, the nation witnessed a notable downturn in petrol imports, with figures plummeting to 1.64 billion litres in June, the first post-subsidy month.
This downward trend persisted in subsequent months, with July recording a further reduction to 1.45 billion litres and August witnessing a significant decline to 1.09 billion litres.
August’s import figures represented a decrease of over 1 billion litres compared to the corresponding period in 2022.
The NBS report underscores the pivotal role of the subsidy removal in reshaping Nigeria’s petrol import landscape with the Nigerian National Petroleum Company emerging as the sole importer of fuel in the current scenario.
Despite higher petrol imports in the first half of 2023 compared to the previous year, the decline in June, July, and August underscores the profound impact of subsidy removal on import dynamics, affirming the NBS’s latest findings.
Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.
Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.
Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.
He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.
Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.
The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.
Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.
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