Nigeria: Expert Predicts Less Foreign Exchange Earning From Natural Gas
Nigeria may likely earn less foreign exchange as global natural gas prices have fallen by over 50% this January.
Mayowa Oluwatomi, a senior analyst at Financial Derivatives Company, made this projection on Thursday while appearing on a Channels Television programme.
Bear in mind that natural gas accounts for 14% of Nigeria’s exports with a value of $10 billion, Oluwatomi said that many European countries have stockpiled natural gas for the winter.
Also, the Winter turned out not to be as cold as the earlier forecast. As such, the demand for natural gas in Europe is currently low.
According to Oluwatomi, the low demand for natural gas will lead to a decline in Nigeria’s foreign exchange earnings because the commodity accounts for 14% of the country’s exports.
It may also be difficult for the federal government to finance the 2023 budget as a result of lower revenues. There could also be more forex restrictions and rationing, forcing many people (including manufacturers for instance) to access dollars at the parallel markets.
Oluwatomi recommended that there should be more investments in the LPG sector, including the construction of a better supply system to ensure that Nigeria can become self-sufficient in liquefied petroleum gas (cooking gas) sector.
She projected that in the new year, more companies will go into LPG production which will increase the country’s capacity.
However, she did not think that with the current numbers, Nigeria will be self-sufficient in cooking gas production in 2023 as the country will still need to rely on imports to make up for shortfalls.