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Nigeria Faces Budget Crisis as Crude Oil Prices Collapse

Nigeria is facing serious economic headwinds as Brent crude prices fall below $60 per barrel, far below the $75 benchmark used for the 2025 federal budget.

With daily oil production also underperforming—averaging just 1.7 million barrels per day versus the budgeted 2.06 million—revenue projections are now in jeopardy.

The implications are stark. Nairametrics estimates Nigeria could lose up to N19.6 trillion in oil revenue if current trends persist. That loss could balloon the fiscal deficit from the planned N13 trillion to over N30 trillion.

Meanwhile, the naira has weakened past N1,600/$, overshooting the N1,500/$ rate used in the budget. As oil revenues decline, so does Nigeria’s capacity to stabilize its currency and balance its books.

The Central Bank of Nigeria (CBN) has intervened in FX markets using dollar reserves accumulated earlier this year, offering temporary relief. At the IMF/World Bank Spring Meetings, officials revealed Nigeria recorded $15.2 billion in net FX inflows in Q1, driven by reforms, diaspora remittances, and investor interest. Still, analysts warn that weak oil prices could limit the CBN’s ability to defend the naira going forward.

International observers are watching closely. JPMorgan’s Joyce Chang praised Nigeria’s reforms but warned that oil price volatility and rising global trade tensions, including new U.S. tariffs, pose renewed risks.

Nigeria’s limited influence in OPEC+ further complicates matters. Recent decisions to raise oil supply were led by Saudi Arabia and Russia, leaving Nigeria—already below quota due to infrastructure issues—on the sidelines.

Finance Minister Wale Edun has acknowledged the risks and confirmed that the government is adjusting its fiscal strategy. A task force is revising revenue assumptions, while NNPC has been instructed to increase output. Efforts to expand non-oil income through tax reform and digital revenue tracking are also underway.

Nigeria now faces a critical test of its fiscal resilience.

📝: @nairametrics

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The Economy Can No Longer Sustain electricity Subsidies — Adelabu Says, Urging Nigerians to prepare for Cost-Reflective Electricity Tariffs

Minister of Power, Adebayo Adelabu, has called on Nigerians to accept cost-reflective electricity tariffs, stating that the economy can no longer sustain blanket subsidies.

Speaking during a meeting with the Chairperson of the Association of Power Generating Companies (APGC), Dr. Joy Ogaji, Adelabu emphasized the urgent need to fully liberalize the power sector.

A statement by his media aide, Bolaji Tunji, quoted the Minister as saying, “Citizens must pay the appropriate price for energy consumed. Targeted subsidies will continue for vulnerable Nigerians, but we must understand that our economy cannot sustain subsidies indefinitely.”

The meeting focused heavily on the N4 trillion debt owed to power generation companies (GenCos)—a crisis threatening to collapse Nigeria’s power infrastructure. Adelabu pledged that a significant portion of the debt will be paid immediately, with the remainder settled within six months using promissory notes and other instruments.

President Bola Tinubu is also expected to meet with GenCos leadership soon to expedite the debt resolution process.

Chairman of APGC and Mainstream Energy Solutions, Col. Sani Bello, described the sector’s liquidity crisis as a “critical threat,” warning that GenCos can no longer obtain loans or maintain infrastructure. Kola Adesina, Chairman of Egbin Power, added: “This is a national emergency. Everything hinges on power—we cannot afford sector failure.”

Ogaji outlined major challenges, including chronic payment defaults, unreliable gas supply, and forex instability. She noted that the naira’s plunge from ₦157/$1 in 2013 to ₦1,600/$1 had severely damaged GenCos’ capacity to repay loans and maintain assets.

Adelabu promised reforms to address these bottlenecks, reduce levies, and promote energy efficiency through public education.

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Presidency Counters AfDB President, Adesina, Says Nigeria’s Economy Has Grown 50 Times Since Independence

The Presidency has pushed back against recent comments by AfDB President Akinwumi Adesina, who claimed Nigerians are worse off today than they were at independence in 1960.

In a formal statement, presidential spokesman Bayo Onanuga described Adesina’s claim as misleading and based on faulty data. Adesina, citing Nairametrics, had said Nigeria’s GDP per capita dropped from $1,847 in 1960 to $824 today.

Onanuga disputed those figures, noting that official records put Nigeria’s 1960 GDP at $4.2 billion, with a per capita income of just $93 for a population of 44.9 million. “Our GDP didn’t grow significantly until the oil boom of the 1970s,” he said.

He cited a steady rise in GDP—from $12.5 billion in 1970 to $164 billion in 1981, eventually peaking at $574 billion after the 2014 GDP rebasing. Per capita income only crossed $880 in 1980 and reached $3,200 in 2014.

But more importantly, Onanuga argued that GDP per capita alone doesn’t capture real improvements in quality of life. “It doesn’t reflect access to healthcare, education, infrastructure, or digital services,” he said.

He highlighted major progress since 1960, when Nigeria had only 18,724 telephone lines. “Today, over 200 million Nigerians have access to mobile phones,” he noted, adding that telecom growth—like MTN’s N1 trillion Q1 2025 revenue—defies the idea of economic regression.

Onanuga concluded that Nigeria’s GDP today is “at least 50 times, if not 100 times, more than it was in 1960,” and said no fair-minded observer could deny the country has made significant progress.

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