…Expert canvasses improved transparency in Nigeria’s earnings
Despite over nine million output cut agreement reached by OPEC and non-OPEC members, oil prices again plunged to an all time low on Monday with the Brent crude, the international marker and Nigeria’s crude grade, dropping five per cent to $26.72 per barrel.
Even more worrisome was the slide of the U.S marker, West Texas Intermediate, losing 99 per cent on Monday, ebbing at $1 per barrel.
Analysts attributed the huge drop in oil prices to the increasing reluctance of buyers to take deliveries as the coronavirus pandemic continues its devastating impact on global economies, leaving buyers without enough storage capacity to cope with supplies.
As it is being predicted that producers may soon be paying for buyers to take buy, indications are that oil-producing countries, particularly Nigeria with no domestic capacity to cope with the worsening shocks in the international oil market, may be worse off economically than earlier predicted if the decline in demand is prolonged.
Reports by Financial Times sourced by Daily Trust indicated that CME Group, the operator of the exchange where WTI trades, took the extraordinary measure of predicting that prices could even turn negative for the current contract, which expires tomorrow.
According to the report, the price crash is the latest indication of the depth of the crisis hitting the oil sector as lockdowns imposed in many of the world’s major economies continue to take huge toll on economic activities across geo-political zones globally.
Jefferies analyst, Jason Gammel, was quoted as saying that the industry is facing “the bleakest oil macro outlook” he had ever seen. Reacting to the worrisome development at the global oil market, a development expert and university don, Prof Godwin Owoh, rued the past fiscal indiscipline of successive administrations in terms of efficiently managing the nation’s crude export earnings and that the current crisis remained a major lesson for managers of the nation’s economy to learn from.
Owoh, a former adviser to Prof. Charles Soludo and currently the executive chairman of Society for Analytical Economics, Nigeria, said that since there is nothing Nigeria could do to change the oil market trend, it behoves on those responsible for managing the oil earnings to be transparent and accountable in all their dealings in the public finance system. He said: “I think to ensure transparency in Nigeria’s oil export earnings, those managing the oil experts earnings should be made to indemnify themselves such that if there is any loss traced to them, they should be made to account for such losses while those found to be transparent and honest should be rewarded. In other words, transparency and accountability are key to improving the nation’s fiscal system.”
