LCCI Charges Federal Government to Tackle Oil Theft to Earn More Foreign Exchange
The Lagos Chamber of Commerce and Industry (LCCI) has charged the Federal Government to tackle the menace of oil theft in the Niger Delta region to earn more foreign exchange for the country.
LCCI also called on the government to take a decisive step towards removing fuel subsidies, which the Nigerian National Petroleum Company (NNPC) Limited estimates to cost the country N6.5 trillion this year on the assumption of 60 million litres daily Premium Motor Spirit (PMS), otherwise known as petrol, supply.
“The average daily crude oil production in Q2 was 1.43mbpd even lower than 1.49mbpd produced in Q1. If oil revenue makes up more than 80 percent of government revenue, we expect the Government to tackle the menace of oil theft and pipeline vandalism with sterner approach,” a statement by LCCI Director-General, Dr. Chinyere Almona said.
The Chamber noted that the oil sector has consistently recorded negative growth for the ninth consecutive quarter, contracting again by -11.8 percent year-on-year in the second quarter of 2022 following a higher contraction of -26 percent year-on-year in the first quarter.
The National Bureau of Statistics (NBS) announced recently that Nigeria’s Gross Domestic Product (GDP) grew in the second quarter of 2022 by 3.54 percent year-on-year in real terms. However, LCCI said “the economy has continued to struggle with many inhibiting burdens like inflation, weak revenue generation, degenerated infrastructure, forex challenges, unsustainable cost profile seen in debt services and subsidy payments, and the daunting threats of worsening insecurity.”
“The Chamber is concerned that if we continue in this trajectory, the economy may bleed away into a stagflation which will impact on production cost, job losses, worsened forex crisis, and dampened growth in the medium term,” the statement noted.
In the second quarter of 2022, the non-oil sector grew by 4.8 percent year-on-year against 6.1 percent year-on-year in the first quarter of 2022. LCCI said the key drivers within the non-oil economy include transportation and storage (51.7% y/y), finance and insurance (18.5% y/y), telecommunications (7.7% y/y), trade (4.5% y/y), real estate (4.4% y/y), construction (4.0% y/y), manufacturing (3% y/y), and agriculture (1.2% y/y). Combined, it explained, these sectors accounted for 78.3 percent of total GDP in the second quarter.
“We urge the government to continue with the non-oil campaigns and interventions to sustain the targeted financing towards boosting non-oil export for enhanced foreign exchange earnings,” the Chamber stated.
“The growth of 1.2 percent recorded for agriculture and the 3% for manufacturing are comparatively low when compared with other sectors that grew at above 5%. This is also indicative of the threats facing these sectors that power Nigeria’s real sector. The woes in these two sectors are responsible for the frightening rise in our inflation rate. And with the excruciating burden from debt service, subsidy payments, and worsening insecurity, many more production activities may be constrained in the coming months.
“The Federal Government needs to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, tackling insecurity, and free more money from subsidy payments. It is also worrisome that the 2023 budget estimations indicate that there may not be any significant allocation to capital projects in 2023. We urge the government to tackle oil theft to earn more foreign exchange, borrow from cheaper sources to reduce the burden of debt servicing, and take a decisive step towards removing fuel subsidies.”
