COVID-19: FG to further slash oil price to $20 per barrel

…As Buhari okays import duty waivers for pharmaceuticals, medical equipment

…Waivers must be temporal to avoid rendering local pharmaceutical firms useless- Mailafia

The excruciating impact of Coronavirus in the global oil economy is currently dealing a blow to Nigeria’s economy as the Federal Government has proposed to further review crude oil price downwards from $30 per barrel to $20 per barrel.

The Daily Times recalls that in April, Minister of Finance, Budget and National Planning, Zainab Ahmed, said the Federal Executive Council (FEC) had sent a revised oil benchmark price to the National Assembly which was put at $30 per barrel.

However, with the current realities of crude oil prices in global market and quantity, number of ships laden with crude oil stranded as there are no buyers, the Federal Government said it will further slash the prices.

The price of crude oil in the 2020 Appropriation act was benchmarked d at $57 per barrel. However, oil price (Brent) in the international market now sells at $29 per barrel, a development which has forced the Federal Government to further amend the price in the budget as oil remains the country’s major source of revenue.

The Finance stated this on Tuesday in a web conference, stating that the amendment is in line with the impact of low oil prices on Africa’s top crude exporter.

Nigerian oil and gas projects will be “delivered much later than originally planned” due to upstream budget cuts.

However, the approval on the current review of the oil prices to $20 will be subject to the approval of the National Assembly.

Asked on when the Federal Government will eventually open its land borders which has been shut since August 2019 to allow imports of items, the minister said consultations have been on and has yielded positive results.

She however added that it is not in her power to declare when it will be open, but the sole decision of the President.

“On land border reopening, we’ve reached a reasonable level of understanding with our neighbours, a clear committment complying with the protocols they were previously abusive.

“The final decision will be made by Mr. President once the pandemic is over,” Ahmed added.

In another development, President Muhammadu Buhari on Tuesday approved a waiver of import duties for medical equipment and supplies.

The waiver is said to be part of the Buhari’s administration move to strengthen health infrastructure in response to the coronavirus pandemic.

Thia was was disclosed by Tolu Ogunlesi, special assistant to the president on new media, in a tweet.

“@MBuhari has approved a blanket waiver of import duties for medical equipment and supplies, as part of @NigeriaGov’s efforts to strengthen health infrastructure in response to the #COVID19 pandemic,” Ogunlesi disclosed on Twitter,”.

According to Ogunlesi “The Presidential waiver on Import duties for medical equipment and supplies as well as directive for expedite clearing took effect from May 1, 2020”.

He added that the President has further directed the Nigerian Customs Service to hasten up clearing of all imported healthcare equipment as well as medical and pharmaceuticals supplies.

Meanwhile, a development economist and a former deputy governor at the Central Bank of Nigeria (CBN), Dr. Obadiah Mailafia, has cautioned to the Federal Government not to make the waivers a permanent policy.

Speaking to the Daily Times on the development, he stated that “Import duty waivers on pharmaceuticals is a welcomed development, but it should only be for a period of time to avoid a situation where a total waivers will lead to the destruction of our local Pharmaceuticals industry,”

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Mailafia noted that increased surveillance by necessary authorities is required to ensure that Nigeria doesn’t become a dumping ground for all sorts of pharmaceuticals.

“Import waivers should not mean we should allow anybody to dump all kinds of products. As such, waivers translate to increase in alertness and surveillance so that substandard medical products will not be dumped in our markerts,” he added.

On the further review of the oil benchmark to $20 per barrel, the renowned economist said the decision is a realistic one especially at a time when revenues are dwindling.

“Fifty percent of our revenues are form oil while the other 50% are from Customs duties and taxes. Now that oil prices are reducing, it will affect half of our revenue receipts now and in the long run, the other 50% may be affected.

“This is because we have a situation where the economy is slowing and companies are not operating which will lead to low tax payment.

“Therefore we should prepare for tough times and most importantly block all leakages in government spending as it is very crucial in a time like this,” Mailafia further stated.