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Rising oil price increases FG’s revenue, but negatively affecting Nigerians

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Crude oil prices hits the $70 dollar mark

The Nigerian Government has been earning more than it earmarked for the 2021 budget due to the rising prices of oil.

The Federal Government’s budget had benchmark $40 per barrel for crude oil price, but the market price has been higher.

As at Thursday, March 4, 2021, oil sold for $63.81 per barrel, and has been trading above $60. This has increased the oil revenue the Nigerian government grossed from the oil market since crude oil crashed to its lowest at $20 per barrel in April 2020.

In the last week of February, between 23rd and 26th, oil sold between $65.18/barrel and $67.15/barrel. During this period, Nigeria pumped over 1.86 million barrels per day.

Prior to the rise in crude oil price, the crash had affected government’s revenue level, with the Minister of Finance, Budget and National Planning, Zainab Ahmed, stating in January, “There is significant fall in crude oil prices resulting into very huge funding gap for the government.

Read also: Naira gains N4.50 against the dollar as crude oil prices soar

“This trend is projected to continue into 2021, hopefully, not beyond, as the pandemic continues to disrupt economic activities globally.”

Ahmed’s hope is becoming a reality, considering the government had projected crude oil to sell for $40 per barrel. With the price above $60 per barrel, Nigeria has generated about N318.4 billion in one month from selling 1.4 million barrels per day.

Rise in oil price affecting Nigerians negatively

While rise in oil price is favouring the Federal Government, it is digging a hole in the pockets of Nigerians, as the rise in oil price has negatively affected their living condition.

The cost of living has skyrocketed in Nigeria, and inflation rate has caused prices of farm produce and household items to jump.

The high cost of living has cut down the purchasing power of the poor and vulnerable, including the middle and high class households.

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