Oil prices crash: Buhari takes tough measures

As crude oil prices continue to crash on the international market, the President Muhammadu Buhari administration has devised strategies to underline its resolve to look beyond oil revenue to implement the 2016 N6.04 trillion budget. The strategies derive their strength partly from big revenue generating government agencies like the Nigeria Customs Service (NCS), the Nigeria National Petroleum Corporation (NNPC), the Federal Inland Revenue Services (FIRS), and the Nigerian Maritime Administration and Safety Agency (NIMASA) and many others. They will no longer draw their expenditure at source. They will remit them into the consolidated revenue account, while their expenditure will be captured in the appropriation act. A bill along this line is in the making and will be transmitted to the National Assembly for passage into law, Daily Trust on Sunday gathered at the weekend.
Furthermore, there will be an overhauling of Nigeria’s tax regime with a view to hugely enhance income, without hurting the poor, such that loopholes and leakages in the previous system will be blocked. The 2016 budget is premised on $38 per barrel oil benchmark, a calculation many commentators on the document have described as infeasible, considering the free fall in oil prices since last year. By last week, crude prices on the market had fallen below $28 per barrel, and with the imminent return of Iran to the global oil market, oil industry analysts have predicted that the price could slump to less than $20 before the year ends. Goldman Sachs, one of the most influential banks in commodity markets, recently forecast that oil could fall below $20, with analysts at Morgan Stanley agreeing. Economists at the Royal Bank of Scotland and analysts at Standard Chartered Bank painted a more frightening picture of oil prices slumping to $16 and $10 a barrel respectively as the economy of China, one of the world’s largest consumers of oil, totters and her demand for oil shrinks. Even the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, admitted in Davos, Switzerland recently that the impact of dwindling production out of shale oil (an alternative to petrol which the US will soon be producing) would impact on prices in the next quarter. “You’re going to see a natural decline of almost a million barrels by virtue of non-investment.

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