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Tag: oil price fall

  • Oil price fall: ‘How Buhari’s financial discipline saved states’

    Oil price fall: ‘How Buhari’s financial discipline saved states’

    With the fall in the price of crude oil to below $40 per barrel, the 36 states would have been in trouble, but for the financial prudence of President Muhammadu Buhari, Borno State Governor Kashim Shettima has said.

    He was addressing his colleagues in Kano.

    His spokesman, Isa Gusau, said in a statement that Shettima spoke at a wedding reception attended by Kano, Kebbi, Niger, Imo, Katsina and Gombe governors at the Government House, Kano.

    Jigawa State Governor Muhammad Badaru Abubakar gave out his daughter, Amina, to Lawan Dahiru Mangal at a fatiha at Umar bn Khattab Mosque, Kano.

    Governor Shettima said: “When the price of crude oil was over $100 per barrel, Borno State was receiving around N4.5 billion per month. Today, oil price has fallen down to less than $40 per barrel, which represents about 80 per cent fall in price. Oil is our main source of revenue. So ordinarily, states like Borno should have received 20 per cent of what we were receiving when oil was over $100. This month, we received N2.6 billion at a time oil is below $40 and this is more than 50 per cent of what we were receiving at a time oil was over $100. Our salary wage is N2.6 billion, but we still have to be grateful to President Buhari because but, for his financial discipline, all here will be in soup by now. I am not here to play politics, I respect the fact that we are a mixture of people with different political affiliation. Our brother, the Gombe State governor, is in PDP so I am not playing politics, but we have a responsibility to explain situations to the public so that they understand the economic times we are in. Buhari has made things tolerable in the face of a bad situation.”

    He commiserated with the government and people of Kano and Kebbi states over fire outbreaks at two markets.

     

  • Oil price fall threatens financial stability, says IMF

    Oil price fall threatens financial stability, says IMF

    The International Monetary Fund (IMF) has warned that risks to financial stability have increased, but remain limited, as oil price fall continues.

    U.S oil fell further yesterday to $48.01, having fallen below the symbolic threshold of $50 a barrel for the first time since April 2009 on Monday.

    The prices of both Brent crude and US oil, known as West Texas Intermediate crude, have now fallen by more than 50 per cent since mid-2014.

    In its report titled Seven Questions About Recent Oil Price Slump, it said currency pressures have so far been limited to a handful of oil exporting countries such as Russia, Nigeria and Venezuela.

    It said  given global financial linkages, these developments demand increased vigilance.

    According to report: “Oil exporters will want to smooth out the adjustment by not curtailing fiscal spending abruptly. For those without savings funds and strong fiscal rules, budgetary and exchange rate pressures may, however, be significant. Without the right monetary policies, this could lead to higher inflation and further depreciation.

    “The fall in oil prices provides an opportunity for many countries to decrease energy subsidies and use the savings toward more targeted transfers, and for some to increase energy taxes and lower other taxes.”

    The report said oil prices have plunged recently, affecting oil  producers, exporters, governments, and consumers.  Overall, the IMF described this as a shot in the arm for the global economy.

    “Bearing in mind that our simulations do not represent a forecast of the state of the global economy, we find a gain for world Gross Domestic Product (GDP) between 0.3 and 0.7 per cent in 2015, compared to a scenario without the drop in oil prices. There is however much more to this complex and evolving story,” it said.

    Oil prices have fallen by over 50 per cent since June, over 40 per cent since September.  Metal prices, which typically react to global activity even more than oil prices, have also decreased but substantially less so than oil.

    “This casual observation suggests that factors specific to the oil market, especially supply ones, could have played an important role in explaining the drop in oil prices,” it said.

    It said the fall in oil prices provides an opportunity for many countries to decrease energy subsidies and use the savings toward more targeted transfers and for some to increase energy taxes and lower other taxes.

    IMF said: “In the euro area and Japan, where demand is weak and conventional monetary policy has done most of what it can, central banks forward guidance is crucial to anchor medium term inflation expectations in the face of falling oil prices.”

  • Oil price slump will not ground Lagos economy — Fashola

    Oil price slump will not ground Lagos economy — Fashola

    Governor Babatunde Fashola (SAN) has on Tuesday disclosed that the continuous fall in crude oil price at the international market will not ground the Lagos State economy.

    Fashola said this at the formal presentation of the state`s 2012-2025 Development Plan in Ikeja.

    According to him, the Lagos economy was not built to rely on earnings from any extractive resource.

    “The uncertainties in the oil market cannot have serious effects on the state`s economy.

    “The state`s economy thrives on its diversity, its rich human resources, strong immigrant capital and government`s sound fiscal policies.

    “Whatever happens to oil, the state will survive. This is because the state`s economy is not built on extractive resources, but on very strong foundations that had ensured continuous development,” he said.

    Fashola said that the drafting of the new economic plan for the state was to promote the state`s development and make it an African model megacity by 2025.

    He said though, some of the components of the plan were already being implemented by the state government and assured that the complete implementation would transform the state massively.

    The governor listed the 70 million Adiyan Water Works, the Island Power Plant and the Alausa Plant, as some of the components of the plan that had been implemented by his administration.

    Governor Fashola enjoined residents to take responsibility of the plan and work with the state government to ensure its successful implementation.

    Earlier, Mr. Ben Akabueze, the Commissioner for Budget and Economic Planning, said that the development plan was borne out of the need to harness the various documents articulating the vision.

    He said that the plan provided the framework to guide private and public investments in government programmes.

    “The purpose of the Development Plan is to provide overall direction for the growth and development of the state.

    “It will provide a framework by which all sectors of the economy can direct their energies and contribute to the improvement of the quality of lives of people in the state.

    In his remark, Mrs. Jariya Hoffman, the Country Director of the World Bank, commended the state government for coming up with the plan, saying that it would further promote development.

    She said that the success of the plan would largely depend on its implementation, urging the state to muster the necessary courage to implement the document.

    The News Agency of Nigeria (NAN) reports that some of the policy targets contained in the document by 2025 included decent housing for all residents and increasing to 40 per cent the contribution of the manufacturing sector to the state’s GDP.

    Others are a 40 per cent reduction in traffic offences and an employment rate of more than 90 per cent.

  • Oil price fall will not affect Nigeria – Jonathan

    Oil price fall will not affect Nigeria – Jonathan

    President Goodluck Jonathan has assured Nigerians and foreign investors of a stable domestic economy despite the disturbing downward slope in global oil prices.

    The President on Thursday gave the assurance when a delegation of multinational industrial giant, General Electric (GE), led by its Vice Chairman and CEO, Mr. John Rice, paid him a courtesy visit at the Presidential Villa, Abuja.

    In a statement issued by Reuben Abati, Special Adviser to the President on Media and Publicity, Jonathan said the Federal Government would do everything possible to maintain domestic economic stability, and urged the company to maintain its confidence in the country.

    “We promise our people that even with the drop in oil prices, the economy will be stable.

    “I urge you to maintain the confidence you have in this country before the oil price drop, and even expect better management from us.

    “Sometimes, it is when you are challenged that you do better than when everything looks good.

    “So, I assure you, other investors in this country and all Nigerians that the government will do everything necessary to stabilise the economy and that the drop in the price of crude oil will not create so much distortion in our economy,” he reiterated.

    President Jonathan thanked GE for its commitment to increase its investment in Nigeria with the attendant benefit of job creation for many more Nigerians.

    He also welcomed GE’s plans to set up a facility in Calabar to manufacture components for the oil and gas sectors.

    Mr. Rice told the President that GE has committed about $30 million to the development of the Calabar Plant and was already undertaking the training abroad of some Nigerians who will work there.