At $65 per barrel, I think the FMF is being once again too optimistic about oil price for 2015. Brent crude currently stands at $69.94 and there have been various analysis that even at $24 per barrel Shale Oil is still profitable. Seriously I think we find ourselves in a fix. With a $74 per barrel benchmark, the recurrent expenditure component for the 2014 budget was a little over 76%. Historically, governments recurrent expenses never shrink which means that even at the price fixed, we will be fortunate to have 10% of our budget left to finance capital projects. Again when you look at our position on the world map and considering the fact that the US no longer buys our oil and that our biggest customer is India and I think followed by China, the problem becomes even more profound. East African countries have been discovering oil wells of recent and if you factor the cost of transporting the black gold to Asia, you will see how attractive the East African markets will be to the Aisans. With about $200bn in excess crude in the last 15years, we have failed to diversify. Okay mistake admitted, we have to move forward. What I think government should do as a matter of urgency is cut down its recurrent expenses by at least 12.5%. I think in diversifying, governments (Federal, State and Local) must begin to establish industrial parks with all the required infrastructure including uninterrupted electricity. Each park must come with at least one independent power generating plant that will guarantee UNINTERRUPTED electricity. To support these plants, these governments must also set up agricultural estates with all the required infrastructure and expertise. We are far from where should be. So far from where we can be but no matter how far youve gone on the wrong road, the wisest thing you can do is turn back
Posted on: Thu, 04 Dec 2014 07:44:22 +0000
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