The N6.8 trillion naira budget presented by our president at an estimated oil price of $38 per barrel from daily oil output production of 2.2 million barrel a day portend some dangers and is programed to fail. I feel the President has a good heart for Nigerians but in this budget, whoever advised him and prepared that document for him does not mean well for PMB and Nigerians. This is my simple analogy as someone in the oil&gas industry:

About 11-month now, market-share war spearheaded by Saudi Arabia and their OPEC members' partners with the hope to arrest the upstart U.S. shale-oil producers and control the market share is the main reason why the oil price is in a decline as both Saudi lead OPEC and US producers have decided to flood the market in a test of might to see who will break out of the market. In our elementary economics, when supply is more than demand the price of goods falls.
The advantage OPEC is having our US shale oil is in the cost of production. Saudi lead OPEC will still remain in business if Oil price drops below $10 per barrel; however it's still cost-effective down to prices of $10 per barrel and above to maintain many existing wells across the United States, which is why drillers have not shut in production. But producers face a significantly higher bar when it comes to authorizing new production, because the cost of drilling and finishing well accounts for the lion's share of lifetime costs.
The “Fragile Five” is the new nickname for Venezuela, Algeria, Iraq, Libya and Nigeria. These major oil producers lack the foreign-exchange reserves and sovereign wealth funds of Saudi Arabia to cushion the blow from dropping oil revenues. These poor OPEC member countries are now at economic breaking point. Without vast sovereign wealth funds and an abundance of cheap oil, they are close to buckling and demanded that OPEC meets to revise its current strategy by cutting down production output from members' countries.
When OPEC finally met in Vienna, Austria, on Friday, 4th December 2015 under the Chairmanship of its President, HE Dr. Emmanuel Ibe Kachikwu, the meeting ended with no agreement to cut down production. Member countries urge to be commitment to ensuring a long-term stable and balanced oil market for both producers and consumers, the Conference agreed that Member Countries should continue to closely monitor developments in the coming months.
The Conference decided that its next Ordinary Meeting will convene on Thursday, 2nd June 2016 in Vienna, Austria. That will be the only time the "Fragile five" hope to achieve production cut from OPEC.
The global surplus of oil is even bigger than Goldman Sachs Group Inc. thought and that could drive prices as low as US$20 a barrel as both Saudi lead OPEC and US shale oil producers continue to flood the oil market.
With OPEC in the vintage position as a result of low production cost, if US shale oil producers push on with this supremacy fight, the price could be as oil as $10 dollars per barrel.
For Nigeria government to hinge their budgetary expenditure for 2016 on a crude oil price of $38 per barrel is suicidal.
The most reasonable option is to peg the budget at $25 per barrel, cut down recurrent expenditure and intensify revenue drive from the non- oil sector.
Government should be bold to tell Nigerians the truth about the realities of today global economic situation.
Borrowing N900 billion abroad which equals 2.16 percent of gross domestic product to fund deficits of N2.2trillion naira in an attempt to fulfil campaign promise is complete self-deceit and mortgaging the future of Nigeria children.
The oil price will crash further and there's no end in sight not until June if OPEC will cut production. However if by June 2016, Nigeria is demanded to cut production from the budgeted 2.2 million barrel a day to 1.5 million barrel a day and the price stabilized at $40 per barrel we are doom.
Let the planners and economic policy formulators look at that budget again for the interest of our common goal as I am not expecting the members of the national assembly to effect any change in that document.

contact me: ukpongh@yahoo.com

Okay

Ok
Nice analysis
So what's the way forward

kolnel:
Ok
Nice analysis
So what's the way forward

Way forward stated in this write up.

Diversify

hopilo:
Diversify

Not sure our will easily tow that line. They tend to like "easy money"!

How does borrowing about 2% of our GDP,potend to mortaging our future?,What do you mean by the govt should be bold to tell nigerians about how hard thing are?....Nairaland and 'analysts' sha.