Buhari reveals that Covid-19 has resulted in a 60% drop in Nigeria’s revenue as crude oil sector has been hit hard

PRESIDENT Muhammadu Buhari has revealed that Nigeria will suffer a 60% drop in  revenue this year as a result of the coronavirus pandemic which has severely hurt government operations and derailed economic expansion plans.

Nigeria is one country that has been severely hurt by the pandemic as among other things, it has led to the collapse in the price and demand of crude oil. Being a mono-economy with about 95% of government revenue coming from the export of petroleum products, Nigeria has been unable to even fund its 2020 budget, so has had to resort to borrowing from the World Bank and International Monetary Fund.

With the economy witnessing negative growth, which is most likely going to last through most of next year too, Nigeria’s government is going to struggle to provide several basis amenities. According to President Buhari, in order to keep the electricity industry going, his administration had so far spent almost N1.7trn supplementing tariffs shortfalls but he added that this is no longer sustainable.

Speaking at the commencement of the first-year ministerial performance review retreat in Abuja, President Buhari assured that his administration is extremely mindful of the pains that higher prices mean and does not take the sacrifices Nigerians have to make for granted. He warned, however, of the severe consequences of a return of a petrol subsidy and a reduction in electricity tariffs will cause the nation.

President Buhari said: “The Covid-19 pandemic has led to a severe downturn in the funds available to finance our budget and has severely hampered our capacity. One of the steps we took at the beginning of the crisis in March when oil prices collapsed at the height of the global lockdown was the deregulation of the price of premium motor spirit (PMS), such that the benefit of lower prices at that time was passed to consumers.

“This was welcome by all and sundry and the effect of deregulation is that PMS prices will change with changes in global oil prices. This means quite regrettably that as oil prices recover, we would see some increases in PMS prices.

“When global prices rose, it meant that the price of petrol locally will also go up. There are several negative consequences if government should attempt to go back to the business of fixing or subsidising PMS prices, as first of all, it would mean a return to the costly subsidy regime.

“Today, we have 60% less revenue and we just cannot afford the cost. The second danger is the potential return of fuel queues, which has, thankfully, become a thing of the past under this administration.

“Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services.  Nevertheless, I want to assure our compatriots that government is extremely mindful of the pains that higher prices mean at this time and we do not take the sacrifices that all Nigerians have to make for granted.”

To address complaints about arbitrary estimated billing in the electricity sector, the president said a mass metering programme is being undertaken to provide meters for over 5m Nigerians, largely driven by preferred procurement from local manufacturers. he added that this would create thousands of jobs in the process.

Also, for most Nigerians not connected to electricity at all, the president said as part of the Economic Sustainability Plan, the country is providing solar home systems to 5m Nigerian households over the next 12 months.