A Review of the Nigerian Energy Industry

2014 budget – Oil theft drives down projection to 3yr low

Oil-theft131 December 2013, Lagos – Oil theft in the Niger Delta, which has significantly affected the nation’s crude oil sales and revenue this year may have informed the federal government’s decision to cut down its projection for oil production in the 2014 Budget.

In the 2014 Budget proposals presented to the National Assembly by the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala on behalf of President Goodluck Jonathan, the federal government is predicating the budget on a projection of 2.3883 million barrels per day (mbpd).

This is the lowest in three years compared to 2.53 million barrels per day in 2013 and 2.48 million barrels per day in 2012. It was gathered that the government may have arrived at the projection based on the current production of 2.38mbpd, as disclosed last week by the Minister of Petroleum Resources, Mrs. Diezani-Alison-Madueke.

The minister, who addressed a joint press conference alongside Okonjo-Iweala and Governor of the Central Bank of Nigeria (CBN) on the ‘missing’ $49.8 billion oil revenue, said the federal government had intensified efforts to combat oil theft, culminating in increased production.

“So I think in terms of our efforts, we have already, over the last two weeks seen an increase from a drop in 2.20mbpd to what is today 2.38mbpd and if we can keep up this level of aggression, we should see it sustained and hopefully increased,” she said.

In the N4.6 trillion 2014 Budget proposals, which is anchored on $77.5 per barrel benchmark, an average exchange rate of N160/$ and real GDP growth rate of 6.75 per cent, Gross Federally Collectible Revenue stands at N10.88 trillion, as well as Gross Federally Collectible Oil & Gas Revenue of N7.16 trillion.

Total deductions, including cost of crude oil production, subsidy payments, and domestic gas development is N2.15 trillion, same as in 2013. Subsidy payments remain at the 2013 level of N971.1billion while Gross Federally Of the total proposed budget of N4,642,960,000,000 (Four Trillion, Six Hundred and Forty-Two billion, Nine Hundred and Sixty Million Naira) , N=399,687,801,891 (Three Hundred and Ninety-Nine billion, Six Hundred and Eighty-Seven Million, Eight Hundred and One Thousand, Eight Hundred and Ninety-One Naira) is for Statutory Transfers, while N712,000,000,000 (Seven Hundred and Twelve Billion Naira) is for Debt Service, N2,430,665,361,597 (Two Trillion, Four Hundred and Thirty Billion, Six Hundred and Sixty-Five Million, Three Hundred and Sixty-One Thousand, Five Hundred and Ninety-Seven Naira), is for Recurrent (Non-Debt) Expenditure while the balance of N1,100,606,836,512 (One Trillion, One Hundred Billion, Six Hundred and Six Million, Eight Hundred and Thirty-Six Thousand, Five Hundred and Twelve Naira), is for Capital Expenditure for the year.

Education has an allocation of N373,452,095,037, and as in the last couple of years, National Security received priority in terms of sectoral allocation, for obvious reasons.

A total of N845 billion is provisioned for recurrent and service-wide votes for the security sector – including the Armed Forces, Police, Office of the National Security Adviser office, and the para-military services.

Under Statutory Transfers, the National Assembly came tops with N150 billion, same as in 2013, followed by Universal Basic Education (UBE) and National Judicial Council (NJC) N70 billion and N68 billion respectively. Meanwhile, a total of N1.01 trillion has so far been released to the Ministries Departments and Agencies) MDAs) in pursuit of the execution of capital projects across the country.

This followed the release of N160 billion for the fourth quarter of the 2013 fiscal year. In the first quarter, the Ministry of Finance had released N400 billion, N200 billion and N250 billion in the second and third quarters respectively.

A total of N598.4 billion of the capital budget or 72.3 per cent has been utilised as at the end of the third quarter of 2013. A balance of N229.6 billion unspent by various ministries, departments and agencies (MDAs) is being kept at the Central Bank of Nigeria (CBN).

According to a recent statement by the Ministry of Finance, the N160 billion released for the fourth quarter brings total spendable balances to N450 billion till the end of the year.
*Ndubuisi Francis, Thisday

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