By Ademola Adegbamigbe
Covid-19, the invisible army from the pit of hell, is waging a pincer attack on nations of the earth. This is by way of deaths and economic crash. Nigeria is not insulated from this two pronged blitzkrieg. In other words, just as corpses spring up everywhere, factory cylinders, at the same time, are grinding to a halt.
For Nigeria, the situation is worrisome. In Lagos, Abuja and Kano, there is a grisly harvest of deaths and, worse still, the virus is creeping into other states. On the economic front, the 2020 budget that was benchmarked on $57 has hit a hard place with the international oil price that is plummeting. Given this development, the new benchmark may now hover between $20 and $30. Governors are already painting a fearful scenario of reduced or zero allocation from the centre.
Thus, this may affect projects as a way of cutting expenses. What, however, has not come up as another belt tightening measure at the Federal level is the allowances of national lawmakers.
Dr. Chidi Amuta, an academic, writer and CEO at Wilson and Weizmann Associates Limited, a firm of Public Relations Consultants, raised a valid point in his recent article in Thisday, “Pessimism as an Entitlement.” He wrote: “By last Monday, however, the United states benchmark West Texas oil price had entered negative territory, trading for May/June futures prices at a frightening minus $34 per barrel. Technically, this means that oil prices are at point zero. Oil, which for over half a century had been the mainstay of the Nigerian economy, suddenly has no value literally.
It is true that Bonny Light which is Nigeria’s benchmark crude is not yet in negative territory but it is trading at less than $20, barely above the average cost of production ($15-17) of each barrel.
It has been further magnified by an unprecedented boost in US shale oil production to a record 13.6 million barrels of oil per day. The glut threw it to Saudi Arabia and Russia to adjust their production downwards to balance out anticipated production cuts by OPEC and thus hopefully tighten prices when global economies recover.
For Nigeria, the risks and dangers ahead are specific and urgent. Here is a country that budgeted for 2020 at $57 per barrel hoping to pump 2.2 million barrels a day. It was to later readjusted to $30 in the heat of the Covid-19 emergency.
The consequential fright of the oil price slump is driven home by the profile of Nigeria’s revenue base as a nation. We derive 60% of government revenue from oil royalties while 90% of our foreign exchange earnings come from oil and gas revenues. For us, therefore, oil prices are an existential variable and a national security factor.
“I am not an economist by any stretch. But those whose business it is to look into these matters have established that Nigeria has the highest break-even oil price in the world at $133 because of a bloated national budget. We pay each of our 109 senators $37,500 a month.
Before Senator Shehu Sani made it known to TheNEWS magazine in March 2018 in an exclusive interview, how much a National legislator earns was shrouded in mystery. It was as if the lawmakers in both chambers of the Senate and House of Representatives swore to an oath of Omata like the Sicilian Cosa Nostra.
Sani revealed to TheNEWS: “The only money you are not expected to account for is your salary and the salary of a senator is about N750, 000.00 per month. The other one, the running cost of office must be accounted for. You must provide a receipt for every expense you make
Then TheNEWS asked about the “over N35 million per quarter for each Senator?” Sani was quick to correct that impression, saying, “There is no N35 million per quarter. That is simply a fiction, because as an activist, I have led protests demanding to know, but there has never been any N35 million. I think what we can say is that the running cost of a senator is N13.5 million. Is that per quarter, this magazine proved further. With emphatic knocks on the table, Senator Sani cut in, “No, every month.”
Read the full Shehu Sani interview here