Stakeholders Decry Huge impact due to Slump in Oil price Reports Nigeria Guardian Online
MORE stakeholders in Nigeria’s maritime sector have continued to lament the negative impact of the drop in price of crude oil in the international market.
Specifically, they are complaining of their inability to sustain existing wage bills.
Indeed, due to the sharp drop in oil price, the revenue profile of both the governments of many exporting nations and that of
Exploration and Production (E&P) oil companies are being threatened.
However, consumers in many importing nations are gaining from the declining oil price because they pay less to either power their homes or drive their cars while exporting nations especially those that depend largely on oil revenue, are experiencing economic recession due to revenue drop.
According to experts, the drop in oil prices is due to a surplus in supply occasioned by increased production in countries like Libya, Angola, and the United States of America, Russia among others.
Chairman, Shipping Association of Nigeria (SAN), Val Usifoh explained recently that when price of oil is on the down ward side, it has serious effect on the economy including the port.
Usifoh, who explained that some port terminals are already operating below optimal capacity due to the slowdown in the economy, added that some terminals have lost close to 50 percent of their cargoes.
Presently, oil companies especially the E&Ps are experiencing pressure on their revenues and profits due to the decline in oil prices to as low as below $50 per barrel.
The development has compelled some major multinational oil companies to reduce the volume of their capital expenditures while some have divested their marginal fields.
An American based investment analyst, Eric Richards, was quoted recently by shipping world, as saying investing in new wells is only profitable when oil is trading at a minimum price of $80 per barrel.
He said: “Cut in capital expenditure could be even higher among small cap stocks where some companies have already announced 50 percent reductions in spending”.
Richards emphasised that the decrease in capital expenditures globally will be particularly hard on oilfield service companies.
In a chat with The Guardian recently, an economist, Matthew R. Otiode, appealed to the Federal Government to urgently map out strategists to reposition the maritime sector.
He said: “The maritime sector has huge potentials but the nation can only reap benefits of such potentials if adequate policies are in place and well implemented,” adding that “with necessary policies, the maritime sector could bridge the gap created by the drop in crude oil price in the international market.”
Mostly affected by the economic challenges are RoRo Terminals and Oil and Gas-designated ports and terminals.
According to maritime stakeholders, the situation has further been compounded by the Central Bank of Nigeria’s (CBN) policy, which restricts access to foreign exchange (FOREX) for about 41 items.
They explained that the development has compelled some importers to route their consignments to ports of neighbouring countries such as Cotonou in Benin Republic from where the goods are subsequently smuggled into Nigeria, thereby depriving the Federal Government of much needed revenue.