•As MPC raises interest rate to 18.5%
From Uche Usim, Abuja
Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, has called for collaborative effort to ramp up crude oil production to 1.8 million barrels per day (bpd) in line with the Organisation of Petroleum Exporting Countries (OPEC), quota, noting that the current 1.1 million bpd production level is abysmally low and a red flag and disturbing development.
Speaking at a post-MPC media briefing in Abuja on Wednesday, Emefiele stated that the Nigerian economy, like others across the globe, is also feeling the impact of the global financial contagion, which is yet to dissipate, saying that crude oil which is major revenue earner for Nigeria should be optimised.
He said: “Last year, our crude oil production was less than a million barrels per day due to several factors. I read recently that our crude oil production has increased to 1.1 mpb. That is a dangerously low level of production, given that OPEC quota for Nigeria is 1.8mpd.
“I know the NNPC is facing its own various challenges but I think it’s time we come together and work hard with NNPC to ramp up crude oil production (with condensate) to about 2.2-2.3 million bpd. If not, there is danger ahead. We should ramp up production”, Emefiele stated.
He said 10 out of 11 members of the Monetary Policy Committee, at their 148th meeting agreed to raise the benchmark interest rate from 18 per cent to 18.5 per cent, in an aggressive push to tame the nation’s raging inflation currently pegged at 22.2 per cent.
According to him, the committee retained other monetary policy parameters, with the asymmetric corridor kept at +100/-700 basis points around the MPR, Cash Reserve Ratio (CRR) at 32.5 per cent and liquidity ratio at 30 per cent. He added that the apex bank was working assiduously to bring down inflation as many Nigerians are querying the rationale behind raising interest rates and yet inflation is not decelerating.
“I would say that our actions are potent because today the inflationary pressure confronting us is global and started in 2022.
Once you raise rates, inflation should go down. In US, the rate of deceleration is beyond their targets.
“In Nigeria, our lag is a bit longer. MPC deliberated on this. We asked how we can convince Nigerians that our model is working. We tasked our research and MPC departments to determine the potency of the models we adopted. We owe Nigerians an explanation. We could see some deceleration on a month on month basis.
From September last year, we raised policy rate to 15.5 per cent. It would have been worse if we did nothing. Inflation could have been about 30 per cent today.
“We shall begin to see inflation come down in months ahead. We’re convinced our model is working. You need to raise rates to constrain credit. Inflation at 22.2 per cent, growth is being impacted. Taming inflation through raising rates is at the heart of what we’re doing”, he explained.
On the apex bank’s intervention programmes, Emefiele said over N8 trillion has been injected to intervene in different sectors such as agriculture, manufacturing health and education, adding that these have helped in sustaining the current growth trajectory in the Nigerian economy.
“We’re now at a high interest rate regime. If we didn’t help then, it would have been hard for those who benefited to access such low-interest facilities today”, he said.
On Dangote refinery, Emefiele described it as a game changer, adding that Nigeria should exit the subsidy era.
“We should exit subsidy. It’s something we should do. With Dangote refinery coming on stream, petrol will be available and the interplay of market forces would ensure it’s sold at a competitive price. Even if the FX saving doesn’t come into the coffers, let the pressure reduce and make dollars available to other matters and not for importing petroleum products.
“CBN, Nigeria helped Dangote set-up and Nigerians should benefit from it. He should be able to throw a few crumbs around”, Emefiele added.