₦airaland Forum

Bevista:
The budget is fraught with disturbing allocations, but it doesn't preclude the fact most of the funds have been allocated to Capital Projects.
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I will excuse the administration on this budget, since the cabinet had less than 2 months to get it ready. I will draw my conclusions by the 2017 budget. Remember, the APC is operating in Aso Rock for the first time, so one should expect some Inexperience to show.

Well we honestly didn't have the luxury to afford to hire a "trainee FEC". All the same the issue of time comes up because the president felt comfortable running a "bokassa" styled regime where all the permanent secretaries take turns to brief him over a 5 months period.

Bevista:
That only validates my earlier position. They are criticizing the President’s foreign currency & import policy.

Well I would disagree with you on this.

Bevista:
I would beg to disagree that the expansionary budget is "wrongly praised". It is exactly what is needed to invest in infrastructure and other parts of the economy with a view to diversifying government revenue. How else do you want government to plan for future revenue in the face of falling oil prices.
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But, yes, the administration FX Policy is so out of sync with economic realities. Extremely poor from Emefiele & PMB.

Infrastructures of websites, connecting cables to drivers office, renovating of the presidential villa etc.?

It is well seen that a good look at the budget shows overbloated numbers that probably add no value to the common nigerian.

But all the same you have proven to be a different type of supporter that doesn't "abobaku" for his principal. At least there have been cases i have seen you disagree with the president's policies, unlike some.

grandstar:
The present government economic policies are an outrage.

The foriegn exchange restrictions is killing the economy.

If the fall in oil prices left the econony half dead, the present statist policies will finish it off.

If this expansionary budget is passed which they wrongly praised. it will cause a drop in the naira to 400 in the nlack market by year ending at the latest. I am actually suspecting by July this year

Coupled with the possibility of a supplementary budget that will no doubt be in the trillions, thus with the interest rates as rightly pointed out in the article presents a possibility of sliding down the slippery slope of a debt crises.

Bevista:
Poor title article. The Economist did not accuse PMB of worsening Nigeria's economy, but merely criticized the administration FX Policy.

Please bro take a look at the last sentence.

ellechrystal:
Exactly. N they will also pick the few lines here n insult the economist as well.

Forgetting that the very reason for that article is to serve as an attack at President Buhari's crude economic tactics. As evident in the title of the article:

Nigeria’s economy, Crude tactics
Cheap oil is causing a currency crisis in Nigeria. Banning imports is no solution

vivalavida:
This is front page material.

Not all those kanye and khalifa yeye beef

I am hoping the mods do move it to frontpage, so we have a balanced view of the message, seeing some people just picked a few lines of insult at the ex-president leaving the very raison d'etre of the article, which is basically a criticism of the President's crude economic tactics.

...
Domestic oil producers are feeling the pinch worst. Many borrowed heavily to buy oilfields when crude was worth more than $100 a barrel, and are now struggling to pay the interest on loans, says Kola Karim, the founder of Shoreline Group, a Nigerian conglomerate. This, in turn, threatens to create a banking crisis. About 20% of Nigerian banks’ loans were made to oil and gas producers (along with another 4% to underperforming power companies). Capital cushions are plumper than they were during an earlier banking crisis in 2009; but, even so, bad debts are mounting and banks that are exposed to oil producers may find themselves in trouble. “It wouldn’t surprise me if one or two went down,” says a senior banker in Nigeria.
The government’s response to the crisis has been three-pronged. First, it is trying to stimulate the economy with a mildly expansionary budget. At the same time, it is trying to protect its dwindling hard-currency reserves by blocking imports. Third, it is trying to suppress inflation by keeping the currency, the naira, pegged at 197-199 to the dollar. Only the first of these policies seems likely to work.
The budget, which includes a plan to spend more on badly needed infrastructure, is a step in the right direction. Although government revenues are under pressure from the falling oil price, Mr Buhari hopes to offset that by plugging “leakages” (a polite term for theft) and taxing people and businesses more. That seems reasonable. At 7%, Nigeria’s tax-to-GDP ratio is pitifully low. Every percentage point increase could yield $5 billion of extra cash for the coffers, reckons Kayode Akindele of TIA Capital, an investment firm. Mr Buhari also plans to save some $5 billion-$7 billion a year by ending fuel subsidies—a crucial reform, if he sticks with it. Even so he will be left with a deficit of $15 billion (3% of GDP) that will have to be filled by domestic and foreign borrowing.

Yet his policies on the currency seem likely to stymie that. The central bank has frozen the naira at its current overvalued official rate for almost a year. The various import bans (on everything from soap to ballpoint pens) are supposed to reduce demand for dollars, but have little effect. Businesses that have to import essential supplies to keep their factories running complain that they have been forced into the black market, where the naira currently trades at 300 or more to the dollar. Several local manufacturers have suspended operations. International investors, knowing that the value of their assets could tumble, have slammed on the brakes and some have pulled money out of the country just as their dollars are most needed (see chart).
Nigeria is fortunate in having low levels of public debt (less than 20% of GDP), but it is not helped by high interest rates, which mean that 35% of government revenue goes straight out of the door again to service its borrowings. It would not take much to push it into a debt crisis.
[/b]Frustratingly,[b] this crunch is one that Nigeria has been through before—under the then youthful Mr Buhari. Then, as now, he refused to let the market set the value of the currency. Instead he shut out imports, causing the legal import trade to fall by almost 50% and killing much of Nigeria’s nascent industry in the process. Between 1980 and 1990, carmaking fell by almost 90%. Today, as in the 1980s, the president is making a bad situation worse.

http://www.economist.com/news/middle-east-and-africa/21689584-cheap-oil-causing-currency-crisis-nigeria-banning-imports-no

Mods, I hope you will do justice to this as well, will be interesting to see this and the other thread calling Jonathan a "buffoon" go head to head,
Same article but different perspectives

Op source pls

Standing5:
So what is driving our production cost up?

Major components include Crude theft bro, insecurity and not to forget armed robber salaries plus the lot of inefficient practices stemming from incompetence or poor training of personnel.

carpenter:
Good point mate.

However, costs are a function of several factors which includes terrain, expertise, getting required equipments, parts and a lot of others I am not privy to. Attached is a how much CNN analysts believe it costs to produce oil around the world...you would notice even the so called advanced countries that have a lot of factors in their favour are way more expensive becuase of other factors...only the ME is lucky to have more in favour than against.

I will look for the original article and post the link if I can find it.

***modified http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?sr=fbcnni112515the-cost-to-produce-a-barrel-of-oil0425AMStoryPhoto&linkId=19035318

The only thing that truly sets up apart besides corruption is we depend too much on oil.

As you have rightly put up in the chart above, here in Nigeria most of the omshore oil fields had been developed a long time ago some almost half a century so the question of capex becomes pretty low for such fields. The important factor here becomes the opex, the opex used to be relatively low for us until armed robber salaries came into play, crude theft vandalisms and shut-ins, security etc. So my point is there should be a focus on the crude theft component, because thats exactly what Emeka Ene is after in this particular interview or article. The former government was well castigated by all of us on the issue of crude loss being about 400000 barrels a day, so we need to know the progress the current administration has made in that regard.

Picture this arbitrary scenario just from a purely opex perspective considering only salaries and crude theft:
If a company's wage bill is $1 million and annual crude production is 100000bbls then the opex costs per bbl is $10/bbl. Assuming you lose or are unable to produce half of that amount what happens, your opex goes to $20/bbl.

I do hope my basic explanation helps.

djon78:
I am envisaging the direction energy business will go in the future. It will be more on adding value then market compared to direct selling of the crude that is done now. In addition total efficiency across the value chain or in another word integration of both the upstream and downstream sector into one entity.

personally I think that those in government must understand that the only thing that will save Nigeria in this present time is total elimination of wastage in the oil industry. when I mean wastage, I mean both theft, incompetence, and inefficiency. Moreover those that have no business being in the oil sector should be removed, because many in that sector have no business being there except because of godfather-ism and nepotism

Final word, there was never plans by successive governments to diversify. while other OPEC member nations were diversifying and investing, especially the Arab gulf states(Saudi Arabia saved over $750 billion that can last them next 20 years without selling, Dubai diversified into services and real estate, Abu dhabi and Qatar diversified into investments across the globe). Our leaders must understand the dilemma and precarious situation facing this nation at the moment and rise to the task before things go out of hand.

You have rightly put it

From the comments I am seeing so far, the emphasis is being put on the slide in the oil price while neglecting the attendant danger of lost crude. At the moment what we should be doing as a country is to lower costs by becoming much more efficient in our production. A break down of the costs of crude production reveals a relatively high operational cost, i believe our aim as a people should be on how to drive down that cost component, to still make a profit i the midst of this all.

In a downturm such as this the least efficient producers will be driven out of the business, more like a survival of the fittest.

comos:
you banking on refineries abroad opening, instead of diversifying the economy.
Nigerian youth of today, what is our education for?

Okay begin to diversify!!!!

comos:
Oil prices fell by 3.5 per cent yesterday, as exceptionally mild temperatures in the early part of the winter in Japan, Europe and the United States – alongside weak economic sentiment in China, Brazil, Russia and other commodity-dependent economies, continue to affect demand.

Brent crude, the global benchmark, was down by $1.13, or 3.5 per cent, at $31.04 a barrel, losing more than two per cent from its closing price on Friday, when Brent surged by10 per cent.

The announcement by Iraq of excessive production record, which was pushed into the already saturated crude oil market, also hit hard on prices.
...

culled from Guardian

Don't worry winter would soon be over and the refineries will be open again, with increased demand.

Oh so we still have the challenge of crude oil theft and as Engr Ene rightly puts it, its worse than the price slide, I had created this thread a while ago about the need to be in the know about how much crude is being lost since the coming of the new sheriff.
https://www.nairaland.com/2848235/current-volume-crude-lost-per
It was a "negative" for the previous administration, so its also important we brainstorm and know how much progress the current has made in this regards.

So, pointing out some of the contradictions between objectives and policies is part of the conversation we’ll have.”

Please go along with an Hausa interpreter so he may be able to understand that so far there has been no positive correlation between his intents, actions and results. Globally we need all the funds we can in this country at the moment, not investors pulling out.
720000 immediate relief jobs pale in significance to the job losses so far, where is the NBS when we need them, to publish current figures on the economy.

oluwasegun007:
go ahead.... den kukuma don sack our people for there..

Hahahahaha bro, so they can sack the rest innit

masseratti:
its better the block is left undeveloped,abacha has no.right to.give out or dash anyone oil block,you cant stand legality on illegality.

Good, then we start retrieve all blocks that were gifted out, from OML 110 given to Mai Deribe(cavendish), to OPL 286 given to Danjuma (sapetro) Akpo, to OML's 112 and 117 given to sani bello (AMNI), to OML 115 given to Mohammed Indimi plus others i can't remember.

ogb5:
For those who don't know the full details, trying to retrieve the block from the current owners will only lead to more trouble and no progress.

The block in question has about 25% of Nigeria ' s oil reserve. The block was not developed for over a decade due to multiple legal suits over ownership of the block.

Jonathan government simply played the role of an intermidiary between the warring factions.

Money was paid by the multinationals under the settlement agreement to the fg and the fg in turn paid the money to malabu effectively stopping the legal suits and allowing development to commence on the oil block.

Some thing to note are.

Nigeria did not lose any money in the oil block deal. Abacha had already 'dashed' the oil block to Etete's malabu previously. And Obasanjo had retrieved it from malabu and given it to Shell. So at the time of the intervention by Jonathan's government, the block had already been given out.

There are legally binding agreements between the FG and Shell and between the FG and malabu with regards to the oil block.

Trying to back out of the legal agreement now will only lead to another round of litigation that will ensure that the block is not developed in the next decade.

Buhari should respect previous legal agreements or he will get Nigeria into unnecessary troubles

Brother very fine points, those who are cheering the government on this round of "cock-sizing" are only ignorant and hoping to set us back as a people.

ISpiksDaTroof:
I see its going to be hard to convince you that life shouldn't be lived in penury.

Sharing opposing views means i live in penury or what are you trying to say?

MadCow1:
As long as dem no ask Etete dem to refund the money because e no go funny at all.

Abi you na century energy?

ISpiksDaTroof:
You don't mind being in the same spot your entire life, huh? Or don't you know the improvement in your life all that money would have done had it been put to develop your society?

MR. Any right thinking person would understand that thwre is a time for everything, right now our priorities should be about the economy and not these probes that drag on with no near term results.

pinardave:
So because shell BP is shutting down their production due to unfavorable economic condition and the present administration`s lack of direction, and you are here spewing up blackmail. Guess, Buhari should realize that any case against shell will not be decided by his pocketed Nigerian judiciary. You guys should tell this govt to be focus oooo
By now every sensible Nigerian has come to the realization that there is something more dangerous than "corruption", "incompetence"is more dangerous than corruption...... A Man can be corrupt and still be profitable but an Incompetent man makes you lose all you are worth and jeopardize your future.....

Buhari has shown himself incompetent in all ramifications ....... The money we have lost by the crash of the Naira alone in the eight month administration of Buhari should equal and exceed all the monies that can ever be stolen by the Jonathan administration ..... Our economy has slowed down and its growth rate is now less than the 10th in Africa. The contracting nature of our economy means we have lost all the economic gains by Jonathan to such a docile government

Amico 1,000,000 likes for you, intl arbitration is the way, of which all along these companies have denied any wrong doing. The stock market lost 1.2 trillion within the first 12 days of 2016 alone and we are here talking about probes rather than the economic emergency staring us in the face.

WebSurfer:
we are not tired... every man must reap what they sow

Only time will tell my brother, I hope you are having a great start to the work week

Of course in light of the economic realities renegotiation is a way out. Oil companies the world over are doing same. An attestation of the brilliance of Fashola sadly seems there are just one or two right thinking people in the cabinet.