After defying rock-bottom expectations by scrapping fuel subsidies and implementing exchange rate reform, Bank of America has predicted President Bola Tinubu’s next major policy reform is taming the menace of the billion-dollar crude heist threatening the finances of Africa’s biggest economy.
“With the current momentum, Tinubu’s next big move should be to reduce oil theft – by reforming the security sector and involving host communities near the pipelines,” Bank of America, one of the big four banking institutions of the United States said in a note seen by BusinessDay.
If successful, the global financial institution predicts this could increase Nigeria’s crude production to 1.6 million barrels per day (bpd) in 12 to 18 months, from the current 1.2m bpd, barring OPEC limits.
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“In our view, increasing crude oil production to 1.6m bpd in the next 12 months is feasible and would be a structural improvement from current levels of about 1.2m bpd. If we include condensates, total oil production could rise from the current 1.4m bpd to 1.8m bpd in two years a level that Nigeria was producing pre-pandemic,” Bank of America added.
Nigeria depends on hydrocarbons for 90 percent of its exports, at least half of fiscal revenues, and about 6 percent of GDP.
“Higher oil revenues and increased effort for non-oil revenue would ease the high debt service burden,” Bank of America said.
