Africa’s biggest producer of oil runs dry
From OKORO CHINEDU in Lagos, Nigeria
LAGOS, (CAJ News) – A LEADING financial think-tank has warned of the implications of the current fuel shortages on a Nigerian economy that is already on a free-fall.
Rand Merchant Bank (RMB), in its latest Global Markets update, released on Wednesday, highlighted a number of developments that suggest no end in sight to the setback.
“The macroeconomic implications of the fuel shortage are severe,” RMB projected.
“Output will consistently fall as businesses are forced to scale-back operations while the run-up in prices generates rampant inflation, setting back an already faltering economy.”
There have been positive developments however with news the refinery at Kaduna, which has the capacity to produce 110 000 barrels per day (bpd) of fuel, will reportedly be back online by mid-April. “But there is no indication as to when the units at Port Harcourt and Warri will recommence production,” RMB said nonetheless.
The financial firm pointed out this was unlikely to give comfort to stranded motorists who have been forced to endure chronic fuel shortages since May.
A dearth of hard-currency US dollar inflows has severely constrained the ability of the National Petroleum to service its import commitments, RMB stated.
“Oil marketers, whose import allocations account for 58 percent of Nigeria’s fuel supplies, have held the economy to ransom by withholding stocks until arrears are settled at a favourable exchange rate. The Ministry of Petroleum Resources has ostensibly negotiated a workable solution to address the liquidity challenge, though details regarding his proposal are sketchy.”
Nigeria, the continent’s biggest producer of crude oil has been facing a dire shortage of fuel in recent weeks.
Coincidentally, plummeting oil prices in the international markets have slowed the growth of the economy, rated as the biggest in Africa.
– CAJ News
Short URL: http://cajnewsafrica.com/?p=12485