Nigeria’s
export earnings is expected to maintain strong growth in 2011 as a
result of an increase in the oil price, higher oil export volumes and
the general recovery of the oil and gas sector.
Experts
reveal that the recovery of the sector which accounts for about 20 per
cent of its Gross Domestic Product GDP, has in turn, boosted the strong
performance of even the non-oil sector. Led by the telecoms sector, the
wholesale and retail trade sector’s brisk growth and agriculture’s
consistently solid growth, they anticipate improved crude oil export
volumes and strong export earnings growth.
“We
estimate a stronger oil price in 2011, averaging $90 per barrel
compared with $80 per barrel in 2010; and improving crude oil export
volumes, given the window between production of 2.45million barrels per
day (bpd) at end of 2010 and potential of three million bpd. This, in
turn, suggests strong export earnings growth for Nigeria in 2011”
Yvonne Nhango, Renaissance Capital’s Sub-Saharan Africa Economist said.
“As
exports constitute about 40 per cent of GDP, this is likely to provide
a considerable boost for Nigeria’s economic growth this year. The
favourable outlook for oil, combined with strong growth in trade and
telecoms and solid growth in agriculture, will result in real GDP
growth of 7.6 per cent in 2011, on our estimates” adding that she
expects the oil and gas sector, which produces almost 20 per cent of
GDP, to sustain its growth momentum in 2011.
Experts
reveal that by prioritising power infrastructure out of all of
Nigeria’s other competing developmental needs, and putting forward more
credible power sector reforms, the President, Goodluck Jonathan has
increased the probability of significant gains in the sector.
“A
Jonathan presidency wILL sustain the momentum of these reforms and
allow, at least, for effective installed electricity capacity to
increase beyond 3,500 MW through repairs and maintenance of the grid,
which can presently only handle 4,000 MW. Increasing installed
generation capacity beyond 4,000-5,000 MW is a longer-term endeavour”
the report said.
Challenges still abound
The
optimism notwithstanding, experts say challenges still abound. Since
the signing of the Niger Delta amnesty agreement in August 2009,
tension has not cooled off in the oil producing region and delays in
delivering jobs and infrastructure in the region are creating
restlessness among the former militants.“Oil traders estimate that the
volume of Nigeria’s oil exports in the first two months of the 2011
calendar year will increase 10 per cent year on year. As oil production
is presently below Nigeria’s 3.0mn bpd capacity, there is room for the
volume of oil exports to increase in 2011. The risk to the production
outlook is an increase in attacks on oil facilities in 1Q11 in the
run-up to the April 2011 elections” the RenCap report stated.
Bismarck
Rewane, an economist and Managing Director, Financial Derivates reveals
that oil revenues which contribute 85 per cent of government revenues
is set for an increase in 2011 as oil production is set to increase and
oil prices remain relatively high.“Oil output for 2011 is expected to
average 2.2 million barrels per day if the relative calm in the region
is maintained and the elected government quickly settles down to the
task of governance. A number of offshore oil fields are expected to
commence operations thereby contributing to this increased output,” Mr
Rewane said.
