Friday, October 2, 2015

President’s Bid to Rev Economy Hits an Oil Shock

Newly elected Nigerian President Muhammadu Buhari’s plans to overhaul the world’s most populous petrostate include pushing people like Bombo Okpe out of the oil business.

Mr. Buhari recently dispatched soldiers to torch the rusted oil drums and steel piping Mr. Okpe had rigged to refine stolen crude into gasoline and kerosene in a mangrove swamp here. Mr. Okpe says he is too afraid to rebuild.

The president’s move marks a major reversal in a country where thieves used to set fire to government refineries and build their own from spare parts. Now Mr. Okpe’s operation is in ashes, while a few miles away engineers are revving up a refinery that hasn’t worked properly in years.

“They see light at the end of the tunnel,” said Hippolite Amadi, an executive director at Warri’s troubled refinery, which has gone in and out of operation for decades. “People want to help the president improve their country.”

Yet Mr. Buhari’s overhauls are running up against a familiar foe: cheap oil. Nigeria’s $22 billion annual budget—of which oil fuels more than 70%—assumes an average oil price of $65 a barrel, but prices are hovering around $45.

“The shock—we still haven’t recovered from it,” Mr. Buhari said on Tuesday, as he attended the United Nations General Assembly. “Being an industry we depend on, it is a very serious economic development. It has really upset us very much.”

(Source: WSJ)

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