Nigeria’s oil windfall rerun: Grab it or waste it again

A geopolitical shock handed Nigeria a fiscal bonanza two and half decades ago. With Saddam Hussein’s tanks rolling into Kuwait, Nigeria amassed an approximate $12.4 billion from the ensuing Gulf war oil jump. This amount would be significantly larger today, even after adjusting for inflation. Pitiably, Nigeria did not use the bonus to build enduring infrastructure; it squandered it on phantom projects that a government probe later certified as “misspent” as the 1994 Okigbo panel found “little to show” for infrastructure, debt reduction or reserves.

Now, global oil prices have heaved above $100 a barrel, inching towards $130 in severe escalation scenarios as Middle East hostilities upset supply. Stakeholders in the Nigerian project are now asking not just how much Nigeria will earn, but whether the present leadership will be wiser.

The potentials, the pains and making it all count

Nigeria’s 2026 budget takes the conservative stance of $64.85 per barrel and 1.84 million barrels per day. Oil revenue is thus estimated at N60.97 trillion. The Nigerian Economic Summit Group (NESG) projects additional revenue up to N30 trillion (c.$20 billion at budget exchange rates) in additional revenue if prices average $130 for six months. This would sufficiently raise external reserves close to $57 billion. A shorter spike has already ushered early gains, with analysts touting more than $1.3 billion addition in March alone.

Nigeria must make this count this time, through institutionalised transparency. Government could treat this excess as seed capital for energy independence. With the Dangote Refinery’s 650,000 bpd capacity already meeting 62 per cent of domestic petrol demand and presenting a historic opportunity to cut the import dependency that had turned windfalls into foreign exchange drains, investing in local refining and gas-to-power infrastructure would convert the price hike, even if temporary, into permanent economic resilience.

The Global crude rise has caused domestic fuel spike to over N1,300 per litre, fuelling inflation and hardship for millions of Nigerians. Consequently, a short, time-bound cushion with a clear exit clause tied to price normalisation could moderate the adverse effects without disturbing the hard-won subsidy removal.

Overall, the lesson from 1991 is harsh and windfalls are transient. But Nigeria has a second chance now, calling on it to save wisely, invest productively, and protect citizens surgically. Otherwise, it should prepare to watch another set of $billions vanish as ordinary Nigerians pay the price. History beckons yet again.