Michael Eboh
Dublin, Ireland — Nigeria’s N36.35 trillion revenue target for 2025 is expected to be hampered by oil earnings constraints, and a low tax base, among others, according to the latest economic analysis by global consulting and services firm, PriceWaterhouseCoopers (PWC).
It warned that risks in the global oil market and rising geopolitical tensions may continue to leave Nigeria exposed to shocks, adding that global geopolitical factors will play an important role in the price of crude.
However, in its ‘2025 Nigeria Budget and Economic Outlook’, titled: ‘Accelerating momentum at an inflection point’, PWC disclosed that the Nigerian economy is expected to record sustained growth and a trade surplus in 2025, driven mainly by increased oil output and high crude oil prices.
It said: “Nigeria’s trade surplus grew by 511 per cent, reaching N6.95 trillion in second quarter 2024, up from N133.2 billion in second quarter 2023, driven by a 190.9 per cent increase in crude oil exports (N14.6 trillion) and a 177 per cent rise in non-oil exports (N4.86 trillion).
“Oil export growth was supported by higher global oil prices and increased domestic crude production, while non-oil exports grew due to stronger agricultural and manufactured product sales.”
“Sustained growth is anticipated in 2025, however, the revenue target of N36.35 trillion is unlikely to be met due to oil revenue constraints and a low tax base.”
It, however, noted that effective tax reforms, the like of which had already commenced in the country, may help achieve the non-oil revenue targets.
“The trade surplus is expected to continue in 2025, supported by higher crude oil production and prices. However, the trade balance remains susceptible to fluctuations in global oil prices, as crude oil exports account for the largest share of Nigeria’s total exports,” It noted.
PWC further stated that despite the coming on stream of the Dangote Refineries, demand for petroleum products in the country will remain sluggish in the short to medium term, due to high prices of the commodities.
The global consulting firm emphasised the need for the award of new oil licenses in order to attract the much-needed investment in the petroleum industry and also raise funds for the government.
According to PWC, deep offshore and marginal oil licensing bid rounds may unlock additional investment in the oil and gas sector, adding that already, the joint venture arrangement between the Nigerian National Petroleum Corporation Limited (NNPCL) and Chevron Nigeria was designed to boost the country’s crude output by 165,000 barrels per day (BPD) by December 2024.
It added that the Petroleum Industry Act (PIA) is expected to comprehensively reform and modernise the oil and gas sector; while the ‘Decade of Gas’ policy is expected to deliver 10 projects, attract $14 billion in Foreign Direct Investments (FDI), raise $12 billion in revenue through royalties and taxes, and create two million jobs by 2030.
Furthermore, PWC disclosed that Nigeria’s enhanced crude oil refining capacity will reduce fuel imports and create by-products for industries, while it will also develop local processing facilities for raw minerals to boost export value.
