November 8, 2017

Some experts on Wednesday lauded the $45 per barrel benchmark for crude oil in the 2018 budget proposal President Muhammadu Buhari presented to a joint session of the National Assembly.

The experts said this in Abuja while speaking in telephone interview with the News Agency of Nigeria (NAN).

“The current benchmark adopted for oil price seems reasonable,’’ Prof. Adeola Adenikiju, former president of the National Association of Energy Economics, said.

“Currently, the average price of oil is significantly above that due to combination of factors – some fundamental, others part of the normal transitory factors that affect the price of oil.

“Most forecasts of oil seem to project oil price in 2018 around upper $40s to middle $50s,’’ Adenikiju explained further.

When asked what would be the case should crude price suddenly nosedive below $45, an economy expert who lectures in a private university, Mrs Felicia Chiogor, told NAN that markets were unpredictable.

She said: “Nobody can actually predict what 2018 holds and what interplay of geo-political forces that will impact on global energy market.

“However, the essence of the Sovereign Wealth Fund (SWF), where there is a portion of the excess price, could be used for budgetary support.

“Moreover, fiscal and monetary policies can be used to mitigate the impact of any shortfall in the price of oil below the benchmark, if that were to occur on the economy, especially if it’s perceived to the temporary.’’

They both lauded the part of the budget proposal that projected N4.165 trillion from non-oil sector, calling it a welcome development to trigger creativity and reduce oil-dependence.