Nigeria can't rely on rising oil prices, finance minister says

“We’ve gotten to a point where we don’t care,” whether oil prices will be sustained at the level that they have recently risen to, Adeosun said during an interview in her office in the capital, Abuja. “We’ve been able to balance our budget at $45-$46/bbl and we’ve got to learn to live comfortably at that level.”

Brent crude has rallied almost 60% since the middle of last year as OPEC and allied producing nations stick to agreed output curbs. The global benchmark traded at about $70.80/bbl in London on Thursday morning.

The OPEC member is recovering from a contraction of its economy in 2016, the first in a quarter century, after a decline in oil prices and in the nation’s output due to unrest in the key Niger river delta. The country can’t afford to rely so much on the commodity anymore, Adeosun said.

Limit exposure

“Yes, it’s at $66-$67/bbl today, but we’ve been here before, right?” she said Tuesday. “And we can’t afford to be exposed to that, so I really try very hard to ignore the oil price.”

Nigeria, which derives about two thirds of its revenue from crude, is seeking to diversify its economy. The government’s efforts include pushing for agricultural expansion to reduce a heavy food-import bill and boost exports.

It is also seeking to plug an infrastructure gap of $25 billion, Adeosun said. “The infrastructure gap is significant, it is far bigger than anybody had imagined, in power, in roads, in rail.”

Nigeria’s foreign-exchange reserves have been boosted by the rise in crude prices, combined with an increase of oil shipments and improved investor confidence. Barring any shock, the Central Bank of Nigeria could build its reserves to $60 billion in the next 12 to 18 months, from $40 billion currently, Governor Godwin Emefiele said in an interview Wednesday.