The Nigerian government is planning to leverage increased crude oil production to help finance the 2025 budget, according to Tanimu Yakubu, Director General of the Budget Office of the Federation.
In a recent interview, Yakubu discussed the government’s efforts to boost oil production, which has been hindered by certain external factors.
Despite these challenges, Yakubu expressed confidence that Nigeria can significantly increase its crude output, aiming for 2.6 million barrels per day in 2024, with projections for further growth.
According to Arise News, Yakubu explained that Nigeria has the potential to produce up to 3 million barrels per day, but external forces have so far limited production to about 900,000 barrels daily.
He highlighted that ongoing reforms and measures under President Bola Ahmed Tinubu’s administration are pushing the country closer to its targets.
Yakubu noted that the government was near a milestone of 2 million barrels per day and was optimistic about reaching the projected 2.6 million barrels per day by 2024.
He added that, “President Bola Ahmed Tinubu is determined, using a combination of measures that will ensure that this output level will be achieved. We are close to 2 million barrels per day. There is also a transaction just approved involving the transfer of assets under a local empowerment arrangement by SPDC, which will give us an additional 130,000 barrels per day in the new year.
“We used to spend as high as one-third of our foreign exchange earnings to import refined products. With Dangote Refinery coming on stream and small local refineries adding to the supply, we think this will substantially reduce the pressure on the naira.”
In addition to the oil production targets, Yakubu outlined efforts to tackle inflation, which currently stands at 34%. The government aims to reduce inflation to 15% by the end of 2024, with the operationalization of the Dangote Refinery and smaller local refineries playing a critical role in this effort. The increased local production of refined products, combined with the reduction in imported fuel, is expected to ease pressure on Nigeria’s foreign exchange reserves and stabilize the naira”, he revealed.
Yakubu also pointed to the growing confidence of foreign investors, citing an increase in foreign portfolio investments, saying “this positive trend is a result of reforms aimed at boosting Nigeria’s economic stability and attracting more capital inflow. Furthermore, the government is focused on reducing the high costs of upstream oil production, which have been a significant drain on the country’s financial resources”.
Yakubu emphasized that President Tinubu is committed to ensuring a substantial decrease in production costs to bolster foreign exchange earnings.
The Budget Office Director General expressed optimism about achieving key economic goals, including a projected GDP growth of over 4% by 2025. He attributed part of this optimism to the improving security situation and enhanced cooperation from communities in the Niger Delta region. These developments, he believes, are instrumental in the government’s efforts to meet its economic targets, including oil production and price stability.
Yakubu concluded by emphasizing government’s determination to achieve its domestic economic goals, particularly in curbing inflation and stabilizing prices.
“With ongoing reforms in the oil sector, the reduced reliance on imported refined products, and improvements in the security landscape, the government is confident that it can create a more stable economic environment that will support growth and reduce inflation in the near future”.
SOURCE: Pendulum
