03 July 2016, Abuja – The Federal Government generated a sum of N724.63bn as oil revenue within the first three months of the year, figures obtained from the Federal Ministry of Finance have indicated.
The figures are contained in the 2016 fiscal account report of the Federal Government for the first quarter of the year prepared by the Office of the Accountant General of the Federation.
According to the report, the country earned a total of N252.10bn as crude oil revenue in January while February and March recorded N251.17bn and N221.35bn, respectively.
A breakdown of the N724.63bn showed that the government through the Nigerian National Petroleum Corporation generated N511.28bn from oil proceeds while the balance of N213.35bn came in from taxes paid by oil companies to the Federal Inland Revenue Service.
An analysis of the statistics showed that the N511.28bn oil revenue by the NNPC was generated as follows: crude oil sales (export and domestic), N402.18bn; gas sales, N6.36bn; oil and gas royalties, N100.69bn.
Others are rent, N158m; gas flared penalty, N374m; and other oil and gas revenues, N1.51bn.
Since the beginning of the year, the gross revenue paid into the federation account has been experiencing a huge decline owing to shut-down of production for repairs.
There had been, for instance, explosions at Escravos terminal and a force majeure was declared at Brass terminal in January and February as a result of attacks on oil facilities.
The 2016 budget, which was signed by President Muhammadu Buhari had projected a daily oil production output of 2.2 million barrels per day with a budgeted oil benchmark price of $38 per barrel.
Based on the revenue projections of the government in the 2016 fiscal period, oil-related revenues are expected to contribute N820bn.
While it is not clear how much the government may lose in terms of companies income taxes owing to the impact of the militant attacks on oil facilities, which may affect the revenues and profits of oil companies, analysts are of the view that about billions of naira would be lost daily in crude oil receipts.
The price of crude oil currently hovers between $50 and $51 per barrel and the country may be losing much in terms of volume as a result of the persistent attacks on oil installations.
But commenting on whether the militant attacks would have any negative impact on the implementation of the 2016 budget, the Federal Government said it won’t.
The Minister of Budget and National Planning, Senator Udo Udoma, who gave the assurance in an interview with our correspondent, said it was too early to determine the impact of pipeline attacks on oil revenue.
Udoma, who spoke through his Special Adviser on Communications, Mr. Akpandem James, expressed optimism that the government would generate enough revenue to fund the budget despite the attacks.
While admitting that the attacks had led to a reduction in volume of oil production from about 2.2 million to 1.6 million barrels per day, the minister said that the fact that oil prices had risen above the budgeted benchmark price of $38 per barrel would cushion the impact.
The minister said, “It is too early to express concern on the impact of the militants’ attacks on oil prices on the budget. People should not raise fears because what is happening may just be a temporary thing.
“But if it gets worse than that, there is already a plan to take care of that because the government was looking at 2.2 million barrel per day at $38 per barrel.
“But now, the price of oil has scaled up to between $50 and $51 per barrel. So, it’s too early to raise such fears because there is no cause for alarm.”
Also speaking, the Country Head, United Nations Industrial Development Organisation, Nigeria, Dr. Chuma Ezedinma, said the government had not done enough to diversify the economy.
He said the Nigerian economy would have grown significantly if the country had not had a myopic view of revenue from oil.
He said, “Oil is just one industry but we have placed so much emphasis on it and Nigeria has abused it because it has led to so much corruption and leakages in the economy and lack of discipline.
“And because of that, we ignored other sectors such as agriculture, other kind of minerals and many other opportunities that we have in the land.
“If you look at the Nigerian economy, we have over 60 sectors that are there for us to utilise and it is only oil that we have been emphasising. This economy would have grown better if we have not had a myopic view of oil. I say this because we exported the crude and never added value to it. Now, that is a misnomer as far as economic development is concerned.”
Ezedinma said until the country started adding value to its crude oil as well as other raw materials, it would be difficult to achieve industrialisation.
“The Nigerian economy today has given us the opportunity to look at other sectors and begin to expand those sectors and industrialisation is the only way to diversify Nigeria’s economy from overdependence on crude oil,” he added.