Unlike past administrations that leaned on fuel subsidies to explain away the gains from oil windfalls, the Bola Tinubu government will have no such privilege. The only option open to his government, and which Nigerians earnestly yearn for, is to utilise the financial boom arising from the war in Iran most judiciously, to build critical infrastructure, consolidate the economy and establish an industrial buffer for future socio-economic contingencies.

As projected, the sustained Middle East conflict has triggered an oil bull run that has turned into a revenue windfall for crude-rich countries, with a dramatic increase in export revenue, foreign exchange inflows, and improved fiscal balances.

From about $70 per barrel before countries in the frontline of the war pulled their first trigger on February 28, oil prices had rallied to about $110 per barrel, nearly a 60 per cent increase. Last week, the ceasefire agreement eased tensions, moderating prices to below $100, which is still far above the baseline price level.

For Nigeria, a $100 per barrel crude is a 33 per cent increase above the $75 set by the Senate and a 54 per cent markup on the executive’s proposal. Even a modest 20 per cent price differential should ordinarily translate to a huge surplus for a country that has long decoupled its fiscal framework from the decay effect of fuel subsidy and transferred the economic burden of a costly hydrocarbon market to the citizens. This can also serve as a revenue buffer government could leverage to reduce fresh debt accumulations, ramp up capital investment to reduce the huge infrastructure funding gap Moody’s Investors Service estimated at $100 billion yearly and build a robust social safety programme.

In moments of global price surges, when crude earnings break projections, oil-producing countries, buoyed by revenue inflows that promise stability, growth and prosperity, increase their sovereign savings and build world-class infrastructure that supports broader economic growth, as exemplified by the Gulf countries. Sadly, Nigeria’s relationship with oil windfalls has long been defined by paradox – a promise of rising inflow that is accompanied by widening fiscal deficit and more borrowing, as well as the prospect of stability that is often scuttled by continued volatile revenue.

Unfortunately, the fiscal headline has not changed much. Government, at all levels, continues to increase its debt exposures, with reports projecting the sovereign debt liability could reach N200 trillion at the close of this year.

With the debt service to revenue still significantly above the 40 per cent red flag level and sovereign buffers in tatters, there is no doubt the public debt stock poses a sustainability challenge. Just one more debt crisis could cripple the entire economy, especially with the current fragile state of public infrastructure.

If Nigeria cannot seize the current oil windfall to improve its fiscal situation, it should not worsen it. In all intent, more than a mere wish is required to stop this period from dissolving into renewed fiscal strain, leaving behind a widening deficit, rising debt obligations and a saddening sense of missed opportunity.  The country needs to ramp up its production. But that itself is not a sufficient solution to averting the absurdity of oil boom inadequacy. The upstream governance requires overhaul reform to consolidate the snippets of decisive decisions President Bola Tinubu has taken to wean the country of the endemic corruption at Nigerian National Petroleum Company (NNPC) Limited, including the Executive Order stopping the automatic deductions from oil and gas revenues at source.

At a similar speed, the President should address oil theft, still a flourishing ‘business’ for a few criminals in the security and political environment. For a country that depends largely on oil sales for foreign exchange earnings, crude theft is no less a capital offence. If this is consistently communicated to the ranks and files of the security agencies and appropriate incentives are given to those charged with the responsibility of protecting oil assets, the country could sustain the 1.8 million barrel per day (mbpd) reached recently and increase the prospect of hitting the magical two mbpd. This is the logical starting point in optimising the hydrocarbon market.

Also, there are questions about the volume of crude that is encumbered. The government has chosen to keep its lips sealed on the important subject matter. Silence, obviously, is not golden anymore. It is controversial enough that the collective destiny of Nigerians appears to have been mortgaged for the benefits of a few individuals in the guise of the crude-for-debt programme promoted under the late Muhammadu Buhari administration; it was worse that the deals were executed under the table.  The least the government should do to appease the aggrieved citizens whose commonwealth was traded is to open the books.

Higher oil revenue is not an end. It is time the country knew commodity revenue for what it is – to build an enduring economy and infrastructure that grows the real sector, on which the majority of the citizens depend for jobs and sustenance. Until we reach the point where we view oil windfalls as a seed that should grow the real sector and the broader economy, the country will remain stuck in a hydrocarbon-centric risk, and the economy will continue to cycle through boom and bust.

Oil windfalls are neither a curse nor a guarantee of fiscal stability. They are a test – a test of governance, discipline and transparency. Nigeria has failed this test too often. Most of the time, fuel subsidies were a plea for mismanaging the previous boom cycles. Fortunately for Nigerians, the current administration does not have that privilege. This is one spike that cannot be explained away.