There’s Possibility Of Zero Oil Revenue To Nigerian Govt For Three To Five Years – Chief Economist, PwC

Nigeria’s oil woes continue as market conditions may make it almost impossible for the country to earn revenue from its largest export commodity in the coming years.

The country was projected to lose  $26.5 billion in oil revenue in 2020 alone with the price of   Benchmark Brent averaging about $20 between April and early May and Nigerian crude grades selling at high discounts to Brent.

The government had adjusted the budget benchmark to $30 dollar and the finance minister, Zainab Ahmed, said it would be adjusted further to $20 per barrel to align with market realities and the impact of the coronavirus on the economy.

“It’s now dawned on everyone across the country how severe this threat is,” Andrew Nevin, a partner and chief economist for Nigeria at PricewaterhouseCoopers LLP, said.

He added, “There is a possibility that at least for three to five years, there’s going to be no revenue flowing to the government from oil.” Bloomberg reports.

Nigeria already needs over $6.9 billion in loans to cover the spending deficit while the International Monetary Fund has approved $3.4 billion and the rest would come from other international lenders.

Over 90% of foreign exchange comes from crude export hence the reserves are badly hit. They are currently at $32 billion, according to  the Central Bank of Nigeria data.

The minister of state for budget, Clement Agba,  at a Webinar on Tuesday said, “It is no longer a secret that government revenues have collapsed.”

Banks like FCMB have already shown signs of the impact of the falling oil price as it said it would restructure its loan due to non payment of loan obligations by debtors, a situation caused by the fall in oil price and the coronavirus.

Meanwhile, most of Nigeria’s lenders prefer giving loans to  businesses in the oil sector, but for some time, debtors have not been able to repay their loans.