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‘Don’t share oil windfall again’

Prices went up above $70 per barrel, another highest price for the year, increasing hopes by Nigeria and other oil producing nations that the commodity…

Prices went up above $70 per barrel, another highest price for the year, increasing hopes by Nigeria and other oil producing nations that the commodity could trade as high as $100 before the end of 2009.

The last time that the crude price reached the rooftop was October, 2008.

Nigeria, which benchmarked $45 per barrel for oil proceeds in the 2009 budget, got N24. 012 billion ($165.6 million) in four days when the commodity traded for $68 while over N6 billion (N6, 525 billion) was added to the revenue on Friday when oil traded for $70 per barrel.

Benchmark crude for July delivery was $70.32 per barrel, the highest since October, after the data. It then fell back to $69.70 a barrel by afternoon in European electronic trading on the New York Mercantile Exchange. On Thursday the contract shot up $2.69 to settle at $68.81.

Oil producing nations under the auspices of the Organisation of Petroleum Exporting Countries (OPEC) have predicted $80 or more for the commodity insisting that “oil could be more lucrative at this price margin.”

Crude’s rise now fetches roughly twice what it did only four months ago – is leading analysts to revise forecasts upward, with many now saying they expect a barrel to cost $80 or more by year’s end.

Crude prices have been boosted by expectations that the US economy could be stabilizing and by some investors’ appetite for oil and other commodities as a hedge against a weak dollar.

Oil prices have risen in tandem with global stock markets, and they have settled this week to their highest levels since November, though the rally was briefly interrupted Wednesday by a jump in US crude inventories.

While it is incontrovertible that the country would rake in more oil revenue before the end of the year following the upward movement of oil price, one thing that has continued to worry Nigerians is how such revenue would benefit all and sundry in the country.

Revenues from crude oil in the last two years have been subjected to sharing among states of the country with little or no impact on the general economy. Worse still, while Nigerians have continued to wallow in poverty and infrastructural deficiencies, some state governors feed fact on the excess crude oil like gluttons.

The effect of this is the growing economic disparity between the governed and the state.

Now that the country is on the move to accrue another oil revenue, there have been heightened concerns among stakeholders in the economy on how such revenue should be managed.

Speaking with Sunday Trust in Lagos, Managing Director of Shoreline Energy Service Limited, Mr Kola Karim said there was nothing wrong with sharing of the oil windfall so far as it was backed by some monitoring measures.

He explained that such monitoring measures behoves the president to keep vigil on the states and recipients of the oil windfall with a view to ensuring that such money was judiciously spent to develop and fund new infrastructure.

‘’The country is in need of new roads, power, railways etc. Such must be zeroed-in while sharing the oil windfall among the states,’’ he said.

He challenged the new Central Bank of Nigeria (CBN) Governor to ensure that enough safety net was provided for the windfall so as to guard against its misuse.

Conversely, the president of the Manufacturers Association of Nigeria (MAN), Alhaji Bashir Borodo said it was rather wrong for the state governments to share the oil windfall.

According to him, instead of sharing the money, the various recipients should divert it to infrastructural development that would have a meaningful impacts on Nigerians.

Borodo said apart from Lagos state government that has a scorecard to show for the oil windfall, other states have shown nothing for sharing the oil money.

Borodo implored the federal government to use its political might to enforce the “no-sharing  of oil windfall”, adding that it was unlikely that the National Assembly and the various state Assemblies in the country would give room for the development.

Citing the dismal performance of the nation’s refineries that had given room for continuous importation of petroleum products into the country, a petroleum marketer and Managing Director of Adexyx Petroleum Limited, Alhaji Fatai Adetayo said the federal government should divert whatever was accrued to the country as oil windfall to revive the ailing refineries.

“We are still importing over 90 percent of petroleum products into the country despite being one of the leading exporters of oil. We keep deceiving ourselves about the fitness of these refineries. The truth is that these refineries have failed us and effort should be made to revive or build new ones.

“Our oil windfall which I gathered is now growing due to international oil prices hike, should be able to help Nigeria get the refineries back to life. Without the refineries in good shape, deregulation and other proposed policies on the oil and gas sector would amount to nothing.”

The president of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr Simon Okolo, said, “Government should, as a deliberate policy and with the consent of governments at the three tiers, channel all excess crude oil sales revenue to the excess crude oil price account and utilize, at least, 50 percent of it to tackle critical infrastructural and social projects [such as power and water supply, health care delivery, education, road construction and maintenance, rail and sea ways networks etc].

‘’We also recommend that government should focus on the possibility of achieving a high crude oil production per day as we cannot be seen to be decreasing. Hence, all drainage pipes should be blocked and effective strategy to boost production ensured’’.

Besides, the National President of Independent Petroleum Marketers Association, Mr Tunji Adedeji told our correspondent that it was strange to continue to share oil revenue windfall considering the staggering nature of the nation’s budget.

‘’It is better to use the oil windfall to consolidate infrastructure in our economy. What they have shared in the past has affected the economy adversely,” Adedeji maintained.

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