Economy
Why Nigeria May Hike Pump Price, Raise Interest Rate, Devalue Naira in 2019
By FSDH Research
Certain key events, both at the global level and in Nigeria, will influence economic and business activities in 2019.
FSDH Research examines a few of these events and discusses the implications for businesses and investments in Nigeria.
The expected hike in interest rates in major advanced countries will lead to an increase in global yields and may put pressure on currency in Nigeria.
There are strong indications that the US Federal Reserve, Bank of England and European Central Bank will increase interest rates in 2019. The expected increase in the interest rate in the international market may also lead to an increase in the interest rate in Nigeria because of monetary policy adjustments to reduce capital flight.
Nigeria may lose a substantial amount of its projected crude oil revenue due to a limit on crude oil production and the drop in the global crude oil price. This may also lead to a drop in the supply of foreign exchange into Nigeria, resulting in a possible depreciation or devaluation of the Naira.
Nigerian businesses should look for local alternatives, where possible, for the raw materials needed for their production process.
They should also limit or eliminate foreign debt, particularly if they do not have foreign exchange receivables to mitigate the possible foreign exchange risk.
FSDH Research also advises that businesses should put in place appropriate foreign exchange hedging strategies. The Q3 2018 Balance of Payment (BoP) report that the Central Bank of Nigeria (CBN) published shows that earnings from crude oil and gas accounted for 94.4 percent of total export earnings during the period.
The external trade report that the National Bureau of Statistics (NBS) published for Q3 2018 shows that crude oil exports accounted for 85 percent of total exports. Therefore, any adverse movement in crude oil price or production has high negative implications on the Nigerian economy.
Although FSDH Research expects the general election in 2019 to be peaceful, its outcome will determine economic activity and business in Nigeria.
A peaceful election will ensure stability of the Nigerian economy and pave the way for the flow of investments, both Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) into Nigeria. Certain longterm business and investment decisions may be taken immediately after the election if the current government retains power.
However, if there is a change in power, investors may wait until after the presidential inauguration on May 29 before they take long-term investment decisions, to give them enough time to access details of the policies of the incoming government.
There are certain macroeconomic realities that the Nigerian government must contend with in 2019.
FSDH Research believes the fiscal deficit in 2019 may be higher than in 2018, and higher than what is projected for the year 2019. In order to execute certain plans that will move the economy forward, government may have to increase borrowing or partner with private sector operators on key projects.
An increase in borrowing will increase the interest rate, while partnership with the private sector will expand economic activity and create new job opportunities.
Already, the ratio of government’s debt service to revenue is high and at an unsustainable level. Therefore, additional debt, in an environment of rising interest rates, may reduce government’s ability to execute critical programmes that will improve the business environment.
While fixed income investors may enjoy higher yields in 2019 than in 2018, businesses may suffer under rising interest costs.
FSDH Research analysis shows that electricity and the pump price of Premium Motor Spirit (PMS) are two key prices that government will need to adjust in 2019 to free up funds for developmental purposes.
The adjustment may increase the inflation rate in the short-term, but it will benefit the economy in the long-term. More investments are required in the power sector than are currently available.
However, the sector may not attract investment in the absence of a cost-reflective tariff. Government already allows an off-grid power supply arrangement based on ‘willing buyer, willing seller’. The tariff at which this arrangement is settled is higher than the tariff for the power from on-grid supply. Appropriate policy responses from government and strategies from the business community may ameliorate the likely negative impacts of these key events in 2019.
By Adedapo Adesanya
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has disclosed that ExxonMobil and its partners have committed $1 billion to on-block activities for the Usan Infill project in oil mining lease (OML) 138, a development expected to add 40,000 barrels per day of oil production.
According to a statement by NUPRC spokesperson, Mr Eniola Akinkuotu, the managing director of ExxonMobil affiliates in Nigeria, Mr Jagir Baxir, announced the investment commitment at the ongoing 2026 NOG Energy Week Conference on Tuesday.
Mr Akinkuotu said the investment is expected to add 40,000 barrels per day as Nigeria seeks to attract new upstream investment and raise crude oil production through the development of offshore and onshore assets.
“Esso Exploration and Production is the operator of OML 138, which contains the Usan field. The block is operated under a Production Sharing Contract with NNPC Limited,” he said.
“Co-venture partners in OML 138 include Chevron, TotalEnergies, and Nexen, a wholly owned subsidiary of CNOOC.
“As a short-cycle investment, the project is expected to sustain and increase production from the Usan field, with first production within 18 months after the seismic data identified the investment opportunity.”
Also, the chief executive of NUPRC, Mrs Oritsemyiwa Eyesan, said the announcement was particularly important because Esso Exploration and Production Nigeria – ExxonMobil’s affiliate – had not undertaken any drilling operation since 2016.
“With Esso’s last drilling operation dating back to 2016, the resumption of drilling signals renewed potential and value in our deep water acreage,” she said, noting that her organisation remains steadfast in advancing Nigeria’s portfolio of deep water projects.
She noted that the projects are critical to meeting the country’s production targets, boosting oil and gas reserves, sustaining government revenue, and strengthening investor confidence.
According to the statement, the NUPRC presented petroleum prospecting licences (PPLs) from the successful conclusion of the 2022/2023 mini bid round and the Nigeria 2024 licensing round.
“Some of the companies that were presented with their awards at the venue include: Broron Energy Limited (PPL 2009), Petroli Energy Marketing and Supply Limited (PPL 269), Sahara Deepwater Resources Limited (PPL 270 and PPL 271) and Tulcan Energy E&P Co (PPL 2008),” NUPRC said.
The commission said execution ceremonies for companies whose representatives were absent would be held at later dates agreed upon by both parties.
According to the NUPRC, the exercise covers 12 successful awardees across 19 PPLs, spanning a balanced mix of deep offshore, shallow water and continental shelf acreages.
The commission said the portfolio reflects the wide range of investment opportunities offered through the licensing rounds.
NUPRC described the awards as another major milestone in Nigeria’s ongoing drive to attract investment into the upstream petroleum sector.
The commission added that the awards would help accelerate exploration activities, expand the country’s hydrocarbon reserves, and generate long-term value for the Nigerian economy.
By Adedapo Adesanya
The Nigerian National Petroleum Company (NNPC) Limited has announced the signing of six strategic agreements with key partners, ranging from Memorandum of Understanding (MoU), Gas Supply Agreement (GSA) and other gas transportation deals, marking a significant milestone in Nigeria’s journey towards industrial revitalisation and enhanced energy security.
The agreements, executed on the sidelines of the ongoing 25th NOG Energy Week in Abuja on Tuesday, include: an MoU with Ajaokuta Steel Company Limited, ASCL; a Gas Sale Aggregation Agreement with Ajaokuta Steel Company Limited; a GSA with UTM FLNG; a Network Entry Agreement with Chevron Nigeria Limited; a Network Entry Agreement with AGPC, and a Network Entry Agreement with NNPC Exploration & Production Limited.
According to the chief executive of the NNPC, Mr Bayo Ojulari, the agreements underscore the state oil company’s commitment to advancing the federal government’s gas-based industrialisation agenda, driving sustainable economic growth and enhancing Nigeria’s energy security.
“What we are witnessing today is not just about signing agreements. It is about igniting the engine of Nigeria’s industrialisation. Gas is the key. It is a source of revenue and profit. It is also the only product that can have that level of industrial impact on Nigeria, more than any other hydrocarbon,” Mr Ojulari stated.
He particularly described the agreements as a testament to NNPC’s shared commitment to transparency, efficiency, and a standardised framework for Nationwide gas utilisation, which will unlock new supply capacity for the domestic market and solidify the role of gas as a catalyst for economic transformation.
Mr Ojulari noted that the agreements signal a new era of strategic partnerships that will drive local content, enhance energy security and accelerate Nigeria’s journey towards becoming a global industrial powerhouse.
He described NNPC as the partner of choice. “We are on a journey, even as we look forward to greater collaboration with industry partners.”
A cornerstone of the signing ceremony was the agreement with Ajaokuta Steel Company Limited. In the MoU, NNPC and ASCL committed to extend collaboration beyond gas supply, aiming to catalyse the production of raw materials for oil and gas pipes, a critical enabler for major infrastructure projects such as the African- Atlantic Gas Pipeline and the Escravos -Lagos Pipeline System (ELPS).
The MoU is anchored on two major pillars: the revitalisation of the Ajaokuta Steel Complex and the expansion of domestic gas utilisation through the Nigerian Gas Transportation Network Code.
This was complemented by the execution of a 20-year Gas Sale and Aggregation Agreement between NNPC E&P Limited, Gas Aggregation Company of Nigeria Ltd/Gte and ASCL.
This agreement will see the supply of 3MMscf/d of Firm Contract Volumes and 47MMscf/d of Interruptible Contract Volumes to be used as feedstock for the power plant servicing the steel complex.
NNPC Ltd/Seplat JV also took a major step towards commercialising Nigeria’s vast natural gas resources by signing a 15-year Wet Gas Sale and Purchase Agreement WGSPA between the NNPC Ltd/Seplat Energy Producing Nigeria Unlimited Joint Venture and UTM FLNG Limited.
Under the agreement, the Joint Venture will supply 200 million standard cubic feet of gas per day (MMscf/d) to the UTM Floating LNG project, providing the long-term feedgas certainty required to support financing and position the project for a Final Investment Decision (FID) in the fourth quarter of 2026.
Further demonstrating its commitment to a regulated and efficient gas market, NNPC announced the successful migration of legacy interconnection agreements to the new Nigerian Gas Transportation Network Code. This involved the signing of Network Entry Agreements with three major gas producers.
These agreements, signed with Chevron Nigeria Limited, CNL, AGPC, and NEPL, will inject up to 800MMscf/d of natural gas into the domestic transportation network. This will serve Nigeria’s power plants, Gas-Based Industries (GBIs), and industrial clusters, significantly enhancing network connectivity and operational flexibility while improving the security of gas supply.
By Adedapo Adesanya
The International Monetary Fund (IMF) has retained Nigeria’s economic growth projections at 4.1 per cent for 2026 and 4.3 per cent for 2027, expressing confidence that ongoing macroeconomic reforms will continue to support the country’s recovery.
The projections, contained in the IMF’s July 2026 World Economic Outlook (WEO) Update titled “Global Economy in Crosscurrents of War and Technology”, remain unchanged from the forecasts released in April, despite mounting global uncertainties stemming from the conflict in the Middle East.
According to the report released yesterday, Nigeria’s growth outlook is being supported by improved macroeconomic stability and favourable terms of trade arising from its status as an oil-exporting nation.
However, the Bretton Woods institution warned that rising prices of essential goods could offset part of these gains by worsening poverty and food insecurity across the country.
The report stated that, “Nigeria is supported by improved macroeconomic stability and favourable terms of trade effects, though higher prices for essentials are expected to further aggravate poverty and food insecurity.”
Speaking during the IMF’s virtual briefing on the July 2026 World Economic Outlook Update for Sub-Saharan Africa and Nigeria, Division Chief in the IMF’s Research Department, Ms Deniz Igan, described Nigeria as one of the region’s stronger-performing large economies, noting that policy reforms have strengthened macroeconomic stability.
“Just to give you a sense, the two largest economies in the region, Nigeria is expected to grow at 4.1 per cent, quite stable, and this is supported by improved macroeconomic stability and favourable terms of trade, with Nigeria being an oil exporter,” Ms Igan said.
She, however, cautioned that inflationary pressures on essential commodities remain a major concern.
“At the same time, tighter prices, so there is some offset to that positive terms of trade effect because higher prices for essentials are expected to aggravate poverty and food insecurity,” she added.
The lender also retained Nigeria’s 2027 growth forecast at 4.3 per cent, as it noted that recent economic reforms are laying the foundation for sustained expansion despite persistent global headwinds.
For the global economy, the IMF projected growth to moderate to 3.0 per cent in 2026 from 3.5 per cent recorded in 2025, attributing the slowdown largely to the economic impact of the Middle East conflict, which is expected to offset part of the gains from the accelerating artificial intelligence-driven technology cycle.
For Sub-Saharan Africa, the IMF projected economic growth of 4.3 per cent in 2026 before improving to 4.5 per cent in 2027. The latest forecast represents a 0.1 percentage point upward revision from the Fund’s April outlook.
Ms Igan noted that the region had experienced broad-based economic recovery in 2025 before the outbreak of the Middle East conflict altered the growth trajectory.
“Let me start by noting that we actually had seen a broad-based pickup in growth in 2025 in the region. We had an acceleration of growth to 4.5 per cent.
“Now, the war obviously has clouded the outlook for 2026, and we are now projecting a softening of growth to 4.3 per cent in the region as a whole,” she said.
