A Review of the Nigerian Energy Industry

Nigeria earns N2.4trn in 3 months, incurs N284bn deficit

CBN corporate Hq 113 May 2013, Lagos – The total revenue collected by the Federal Government stood at N2. 425.3 trillion in the first three months of 2013, the Central Bank of Nigeria, CBN, has reported in its first quarter 2013 report on its website.

The report, however, said “the Federal Government retained revenue was N908.1 billion, while total expenditure was N1.192.9 trillion.

Thus, the fiscal operations of the Federal Government resulted in an estimated deficit of N284.8billion or 2.9 per cent of estimated nominal GDP for first quarter 2013, compared with the quarterly budgeted deficit and the preceding quarter’s deficits of N276.1billion and N76.9billion, respectively”.

According to the CBN, revenue for the three months showed “a decline of 2.4 and 17.9 per cent below the receipts in the preceding quarter and corresponding quarter of 2012, respectively”.

The report said “at N1. 849.5trillion, oil receipts, which constituted 76.3 per cent of the total, exceeded both the budget estimate and receipts in the preceding quarter by 15.5 and 1.4 per cent, respectively, but declined by 22.2 per cent below the receipts in the corresponding period of 2012.

The increase in oil receipts relative to the preceding period was attributed, largely, to the rise in the receipts from crude oil/gas exports and domestic crude oil/ gas sales and “other” oil revenue during the review period.

According to the CBN “Non-oil receipts, at N575.8 billion was below the budget estimate and receipts in the preceding quarter by 23.3 and 12.8 per cent, respectively.

Nigeria’s crude oil production the CBN said “including condensates and natural gas liquids, was estimated at an average of 2.05million barrels per day (mbd) or 184.50million barrels for the quarter. Crude oil export stood at 1.60mbd or 144.0million barrels for the quarter, while deliveries to the refineries for domestic consumption remained at 0.45 mbd or 40.50million barrels. The average price of Nigeria’s reference crude, the Bonny Light (370 API), estimated at US$115.34 per barrel, rose by 2.3 per cent over the level in the preceding quarter.

Giving details of the fiscal operations of the three tiers of government in the country, the CBN said “Of the gross collected revenue during the review quarter, the sum of N1,366.70 billion (after accounting for all deductions and transfers) was transferred to the Federation Account for distribution among the three tiers of government and the 13 percent derivation fund. The Federal Government received N643.79billion, while the states and local governments received N326.54billion and N251.75billion, respectively.

The balance of N144.62billion went to the 13 percent derivation fund for distribution by the oil-producing states. Also, the Federal Government received N26.72billion from the VAT pool account, while the state and local governments received N89.06billion and N62.34 billion, respectively.

In addition, the sum of N333.81billion was drawn from the Excess Crude Account ,ECA, to bridge the short-fall in revenue for the period and was shared as follows: Federal (N152.99billion), states (N77.60billion), local governments (N59.83 billion) and oil producing states (N43.40 billion).

“An additional N106.65billion was also distributed among the tiers of government and oil producing states from the Subsidy Re-investment and the sum of N1,366.70 billion out of the revenue was set aside for distribution by the three tiers of government and the 13 perceent derivation fund for oil producing states.

Thus, the total allocation to the three tiers of government in the first quarter of 2013 amounted to N2,008.12 billion. This exceeded the 2013 quarterly budget estimate by 9.3 per cent.

At N908.14billion, the Federal Government retained revenue for the first quarter of 2013 was lower than both the proportionate budget estimate and receipts in the preceding quarter by 11.0 and 1.6 per cent, respectively.

Relative to the receipts in the corresponding period of 2012, Federal Government retained revenue also declined by 10.6 per cent. Of this amount, the Federal Government share from the Federation Account, VAT pool account and Federal Government independent revenue were N643.87billion, N26.34billion and N35.42billion, respectively, while “others” accounted for the balance of N202.51billion.

“Total estimated expenditure for the first quarter stood at N1.19292trillion and was lower than the proportionate budget estimate by 8.0 per cent, but higher than the levels in the preceding quarter and corresponding period of 2012 by 5.5 and 8.3 per cent, respectively.

The development (relative to the quarterly budget estimate) was attributed to the delay in capital releases during the review period. A breakdown of the total expenditure showed that the recurrent component accounted for 65.5 per cent, capital component 27.0 per cent, while statutory transfers accounted for the balance of 7.5 per cent

Further breakdown of the recurrent expenditure showed that the non-debt component accounted for 77.4 per cent, while debt service payments accounted for the balance of 22.6 per cent.

Thus, the fiscal operations of the Federal Government resulted in an estimated deficit of N284.78 billion or 2.9per cent of the estimated nominal GDP for the quarter, compared with the 2013 benchmark and the preceding quarter deficits of N276.11billion and N207.32 billion, respectively. The deficit was financed mainly from domestic sources.

According to the CBN, “total allocation to state governments (including the Federation Account, 13.0 per cent Derivation Fund and share of VAT receipts) stood at N734.07billion in the first quarter 2013. This represented a decline of 1.0 per cent below the level in the preceding quarter, but an increase of 4.0 per cent above the level in the corresponding quarter of 2012.

“Further breakdown showed that at N645.01 billion, receipts from Federation Account constituted 87.9 per cent of the total, indicating a decline of 0.2 and 0.5 per cent age point relative to the levels in the preceding quarter and the corresponding period of 2012, respectively. At N89.06 billion, receipts from VAT constituted 12.1 per cent of the total, indicating an increase of 0.2 and 0.5 percentage point relative to the levels in the preceding quarter and the corresponding period of 2012, respectively.

“On a monthly basis, the sum of N205.22 billion, N207.49 billion and N321.36 billion was allocated as statutory allocations and VAT receipts to the 36 state governments in January, February and March 2013, respectively.

“Total receipts by the Local Governments from the Federation and VAT pool accounts during the first quarter of 2013, stood at N401.68billion. This amount was below the levels in the preceding quarter and corresponding period of 2012 by 3.8 and 2.4 per cent, respectively.

Of the total amount, allocation from the Federation Account was N339.34billion (84.5per cent), while VAT Pool Account accounted for the balance of N62.34billion (15.5 per cent). On a monthly basis, the sum of N113.61billion, N116.49billion and N171.58 billion was allocated to the 774 local governments in January, February and March 2013, respectively”.

The CBN first quarter 2013 report noted that “the end -period headline inflation rate (year-on-year) was 8.6per cent, compared to12.0and 1 2.1per cent recorded at the end of the preceding quarter and the corresponding quarter of 2012, respectively.

Inflation rate on a twelve-month moving average basis was 11.4per cent, compared with 12.2and 10.9 per cent in the preceding quarter and the corresponding quarter of 2012, respectively.

It said that “Foreign exchange inflow and outflow through the Central Bank of Nigeria (CBN) amounted to $10.50 billion and US$6.44billion, respectively, resulting in a net inflow of $4.06billion during the quarter. Foreign exchange sales by the CBN to the authorized dealers amounted to $4.65 billion, compared with $4.27billion in the preceding quarter.

“The average exchange rate of the Naira vis-à-vis the US dollar at the WDAS window the CBN said appreciated marginally by 0.01 and 0.1 per cent to N157.30 per US dollar relative to its levels at the end of the preceding quarter and corresponding period of 2012. In the bureau-de-change segment of the market, the Naira traded at an average of N159.18per US dollar, compared with N159.19 per US dollar in the preceding quarter.

The CBN report further said “At N15.423billion, aggregate banking system credit (net) to the domestic economy, rose by 10.5per cent at the end of the first quarter of 2013, compared with the growth of 4.4 per cent and a decline of 0.06 per cent at the end of the preceding quarter and the corresponding quarter of 2012, respectively.

“The development relative to the preceding quarter’s level, reflected, largely, the 112.4 per cent increase in claims on the Federal Government. Banking system’s credit (net) to the Federal Government, at the end of the review quarter rose by 112.4 per cent to N164.8 billion, compared with the growth of 15.0 and a decline of 11.3 per cent at the end of the preceding quarter and corresponding period of 2012, respectively. The development was accounted for, largely, by the increase in banking system’s holdings of Federal Government securities.

The CBN said that “At the end of first quarter 2013, banking system’s credit to the private sector fell by 0.2 per cent to N15.2853 trillion, compared with the increase of 2.3 per cent at the end of the preceding quarter and a decline of 0.45 per cent at the end quarter changes, while CM1 and CM2 represent cumulative changes (year -to-date).

Banking system credit to the federal government rose at the end of the first quarter of 2013 of the corresponding period of 2012. The development, relative to the preceding quarter was attributed, wholly, to the 0.2 and 0.6 per cent decline in claims on the core private sector and the State and Local Government, respectively.

“At N 9.374.8 trillion, foreign assets (net) of the banking system increased by 3.0 per cent at the end of the review quarter, compared with the increase of 10.1 and 2.4 per cent at the end of the preceding quarter and corresponding period of 2012, respectively.

The development was attributed, largely, to the 3.1 and 2.7 per cent increase in CBN and DMBs” holdings of foreign assets, respectively. At the end of the review quarter, other assets (net) of the banking system rose by 16.2 per cent to negative N9, 213.3billion, compared with the growth of 4.6 and 2.6 per cent at the end of the preceding quarter and the corresponding period of 2012, respectively. The increase, relative to the preceding quarter reflected, largely, the rise in unclassified assets of the CBN.

“Currency-in-circulation, CIC, and Deposits at the CBN At N1.508.51 trillion, currency in circulation fell by 7.6per cent at the end of the first quarter of 2013, in contrast to the growth of 20.9 per cent at the end of the preceding quarter. The development was attributed, largely, to the 4.5per cent decline in currency outside the banking system.

Total deposits at the CBN amounted to N6.39632 trillion, indicating a decline of 0.13 per cent, in contrast to the growth of 6.9 per cent at the end of the preceding quarter. The development reflected largely, the 0.23 and 0.18 per cent fall in the deposits of the private sector and Federal Government, respectively, which more than off-set the marginal increase in deposits of DMBs.

“Of the total deposits, the shares of the Federal Government, banks and, “others” were N3.87967trillion (61.0per cent), N1.98667 trillion (31.0per cent) and N529.96billion (8.0 per cent), respectively. Though DMBs” deposit with CBN rose during the review period, reserve money (RM) fell by 1.1 per cent to N3,495.18billion, from N3.53210 trillion at the end of the preceding quarter, owing to the 7.6 per cent decline its currency in circulation component, which more than offset the rise in DMBs deposit with the CBN”.
*Gabriel Omoh

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