Dwindling oil reserves: Necessity of expediting efforts on diversifying economy

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Every sound mind would really be troubled with what will befall the Country in the nearest future over the recent revelations by the Department of Petroleum Resources (DPR) that the Country’s crude oil reserves of 37 billion barrels, two per cent of which is being produced annually, will be depleted in 49 years.

According to statistical reports from the Department, the reserves, which stood at 37.45 billion barrels in 2014, fell to 37.06 billion barrels in 2015 and 36.74 billion barrels in 2016. It however, rose to 36.97 billion barrels in 2017 and 37 billion barrels in 2018. The nation’s depletion rate and life index are pegged at 2.04 per cent and 49.03 years respectively. The reserves depletion rate is a measure of 2018 total oil and condensate production divided by the reserves as of January 1, 2019, according to the DPR .

The report stated further that “This indicator gives a bird’s eye on an annual basis, what percentage proportion of the quoted reserves was produced. The life index, on the other hand, is a measure of the reserves as of January 1, 2019, divided by the total production in 2018. This parameter highlights how long (in year) quoted reserves volumes will be available for production.” The Department  stressed that to achieve the government’s aspiration of four million barrels per day production and reserves of 40 billion barrels, “there is a need for corresponding increase in reserves as production increases. The life index will fall from a sustainable long-term threshold to a less futuristic and sustainable medium to short-term range.”

It is high time the Nigerian Government stopped the lip service commitment to diversifying the economy. Posterity will judge the Government if it keeps on with the trend of the systematical sole dependence on oil. Nigeria is blessed with potentials beyond the status-reduction  to  a mono-economic Country, solely dependence on oil and subjected to the vagaries of global oil prices. The effects of the sole dependence have not stopped to portend grave effects on the Country, which has plunged the Country into the depths of recession with much intensity since 2016.  The situation now is no much better. The acclaimed recovery from the recession is particularly irreconcilably slow and almost having no improving effect.

The Federal Government should rise up to task given that the economy is practically in a crisis, demanding emergency approach. The diversification of the economy should above doubt be taken beyond lip services and the slowly pace by which it is currently handled. Beyond the diminishing of the oil reserves of the Country, the vagaries of oil prices in the global market should be enough pointer to the Federal Government to take up the necessity of diversifying the economy with much more intensity.

The various State Governments should complement the effort of the Federal Government by bracing up their attitudes towards developing local sectors within their domains. The dependence norm of relying solely on the monthly Federal allocation should begin to wear away on the part of the State Governments. It is essential that they begin to come up with creative ways to develop their various local economies.

While constitutional provisions may not permit the extraction of certain natural resources, this is not enough reason for State Governments to remain redundant on Internal Revenue Generation (IGR). There are several avenues State Governments can explore to develop their local economies across sectors. Agriculture is not far from sight on the list. The growth of agriculture in the Federation should not be left to the Federal Government alone. It is high time State Governments began the development of  local industrial productions and manufacturing to complement proceeds of agricultural venture.