FG Struggles to Sell Oil Despite Offering Huge Discounts

• FG Struggles to Sell Oil Despite Offering Huge Discounts

Despite huge discounts being offered by the Federal Government to lure buyers to Nigerian crude grades, many of the nation’s cargoes remain without a buyer, according to a recent report by Bloomberg.

In the price list released by the Nigerian National Petroleum Corporation (NNPC) on Monday for all crude grades for the month of May, two of Nigeria’s main grades, Qua Iboe and Bonny Light, will sell at discounts of $3.92 and $3.95 respectively to Dated Brent in May. The two main grades are heavily discounted than they were in April despite prices been extremely cheap.

The drop in global demand for crude oil continues to hurt Nigeria’s economy and has forced the nation to seek external funding for most of its 2020 projects. The International Monetary Fund on Wednesday approved $3.4 billion under the Rapid Financing Instrument to enable Africa’s largest economy cushioned the effect of COVID-19 on its economy.

According to Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, IMF, low oil prices amid weak demand has increased Nigeria’s need for external financing as both foreign and local revenue generations have plunged due to coronavirus pandemic.

The nation’s foreign reserves declined from $38 billion at the beginning of the year to $33.44 billion on Tuesday, according to the data published by the Central Bank of Nigeria. Highlighting the imperative of external finance to Africa’s most populous nation.

Furusawa said, “These shocks have created large external and financing needs for 2020.

“Additional declines in oil prices and more protracted containment measures would seriously affect the real and financial sectors and strain the country’s financing.”

The Senate approved another N850 billion loan request from President Muhammadu Buhari on Tuesday while the president is also looking to approach the World Bank, African Development Bank and other financial institutions for additional loans to the tune of $6.9 billion.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has said without a broad stimulus package the nation will plunge into an economic recession this year.