Should oil price average $55 barrels per day this year and recent oil production trends in the country continue, Nigeria could see about $5bn (N985bn) oil revenue shortfall, PricewaterhouseCoopers has said.

PwC’s economists, in a new report published on Wednesday, said this financing hole could widen to about $10bn in the event of a re-emergence of Iran oil production in the second quarter of the year as price is expected to hit a low point of $35 per barrel, slowly recovering to an average of $45 per barrel.

They said significant debt issuance and cuts to recurrent expenditure would be needed, adding that state governments could struggle to borrow from the financial markets to pay their workers.

According to the report, some highly-indebted states may miss planned interest payments on their debts.

If oil production falls by 15 per cent through bunkering and other supply disruptions, gross oil revenues will fall to a third of the 2013 level (about $43bn), it stated.

“Combined with difficulties of administering tax collection from unstable parts of the country, we would expect the Federal Government to fall over three months behind on paying employee wages and government bond yields on US dollar-debt could approach 20 per cent,” the economists noted.

They said that they expected that if the oil price continued to stabilise, the Central Bank of Nigeria’s recent adjustment of the exchange rate regime would be sufficient to ease pressure on the naira this year.

“However, if oil prices deteriorate further, a further 10 per cent devaluation of the naira will be necessary in 2015,” they stated.

They said any deterioration of the political and security landscape could unnerve investors and tip the country into recession.

If a ‘medium’ political shock occurs against the backdrop of a severe oil price scenario, the report predicts that Nigeria’s economy could see zero growth or even contract in 2015 and 2016.

It, however, stated that despite the uncertainties generated by the volatility in oil prices and the significant drop in government revenue, the Nigerian economy would continue to grow, even if oil prices fall to $35 per barrel and average just $45 in 2015, provided there was no deterioration of the political and security landscape.

A Partner and Chief Economist at PwC Nigeria, Dr. Andrew Nevin, said, “Our modelling and forecasts show that while the economy will continue to struggle even under the most benign scenario, it will be able to realise growth averaging four per cent for the period.

“Despite oil’s importance to the Nigerian exchequer, the real economy is largely insulated against falling oil prices. This is driven by the fundamental structure of Nigeria’s economy and how the oil and public sectors interact with the non-oil sector.”

Source:http://www.punchng.com/business/business-economy/nigeria-may-lose-n985bn-oil-revenue-this-year-pwc/

Hmmm

I don't see this country moving forward if we don't invest rapidly into other sectors like Agriculture, mining, education and adequate power supply to replace crude oil. I wish the oil could vanish now.

Well, as bad as it is, this piece is based on the condition of 'IF'.

By the way, someone and his cohorts squandered and raped our legitimate resources more than that nw. Abi?

Therefore, myself and all other well meaning Nigerians, await our VOLTRON - Muhammad Buhari to restore transparency, Decorum, Due process and Discipline in the oil sector and other vehicles of government.

Change is a process and it is painful at times. If the loss is the pain process we have to go through to smile again, then SO BE IT.

GOD Bless the Charismatic President of the Federal Republic of Nigeria; General Muhamadu Buhari!

Dat one na Spiritual money. Money for d gods. It can never be seen bcoz it is spiritually invisible.

Don't worry Uncle B is set to stabilise international oil prices so you lazy leeches can feed fat on your azzes on Niger Delta oik.

Useless nation

If I were Buhari, one of the first actions I'd take on assumption of duty is to comb every single book from finance ministry and customs and get rid of those questionable waivers granted some importers.

Imagine these guys were granting waivers to Coscharis for the import of Luxury cars...

And NOI claims to be a good economist.

any slight mishap in our economy greatly affects our recurrent expenditure..

BackDatAssUp:
Don't worry Uncle B is set to stabilise international oil prices so you lazy leeches can feed fat on your azzes on Niger Delta oik.
Useless nation

Una TANoids nor dey tire?? 4 years long oo.

What and who's stopping you stopping you from relocating to Burundi?

Na by force to live for here?

There couldn't be a better time for Govt. to start rapid diversification of the economy. The mismanagement in the oil sector has left us in a position akin to recession.

We need to make policies that will fast-track our diversification agenda. All thanks to our so called CME, NOI who deceived us that things were okay rather we're far from okay.

Well no time for lamentations, lets get to work.

Diversification is urgently required.

Need to push out of over reliance on black gold. Open up other sectors and hopefully can generate a sizable alternative sources of funds.

Cc: lalasticlala ishilove

Any small disruption in oil production activities will result in Nigeria going into recession. Niger deltans no violence please, Buhari no disruption of Niger deltan interest.

That's what happened when your source of income is majorly based on commodities. Any hit in the commodity market will automatically affect your income and the economy at large. Simple, stop running a commodity-powered economy. Diversification into non-commodity is the best path. AFRICA MUST WAKE UP.

Chai

Oyel oyel oyel..... invest rapidly on something else please!!! AGRICULTURE is there also

Hmm

Good

The only news I wanna hear is buhari pls

Makes no difference , we don't benefit from the oil sales anyway ...stupid story

Don't worry, next 24 hours, Baba One Chance will come and stabilize the oil prices

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Is it a curse that we have oil. Nigeria seemed to be better off during the era of groundnut pyramid. It is time we diversify our economy.

To an average Nigerian - PwC should stop nonsense speculations...

You that cannot reconcile $20bn conclusively..keep your financial modelling and forecasting advice where your mouth is.

Hopefully, we can get other high revenue generating policies and industries to fall back on soonest. Oil has played its part in the development of Nigeria. It might still be the most important, but shouldn't be so by such a wide margin.

Just imagine if we had about $70 billion in our foreign reserves and ECA!

Unfortunately, Jona and his crew wasted the golden era in our nation's history.

Time for baba to diversify the economy big time.

Buhari should work towards diversifying the economy, solely depending on oil makes no sense!

We don hear, Baba is coming

Watch Video Of Buhari's View On Fuel Subsidy