PriceWaterhouseCoopers, one of Nigeria's top auditing firms, has come out with damning report where it said that the nation could lose as much N985 billion in revenue if the oil revenue shortfall continues, going by the oil price average of $55 barrels per day, and the recent oil production trends in the country.
PwC’s economists, in a new report published on Wednesday, said this financing hole could widen to about $10 billion in the event of a re-emergence of Iran oil production in the second quarter of the year as price is expected to hit a low point of $35 per barrel, slowly recovering to an average of $45 per barrel.
The firm's report says a significant debt issuance and cuts to recurrent expenditure would be needed, adding that state governments could struggle to borrow from the financial markets to pay their workers.
According to the report, some highly-indebted states may miss planned interest payments on their debts.
If oil production falls by 15 per cent through bunkering and other supply disruptions, gross oil revenues will fall to a third of the 2013 level (about $43bn), it stated.
The report adds:
"Combined with difficulties of administering tax collection from unstable parts of the country, we would expect the Federal Government to fall over three months behind on paying employee wages and government bond yields on US dollar-debt could approach 20 per cent."
They said that they expected that if the oil price continued to stabilise, the Central Bank of Nigeria’s recent adjustment of the exchange rate regime would be sufficient to ease pressure on the naira this year.