Nigeria loses N1.3trn over decline in crude revenue

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*Oil VandalsNigeria lost N1.292 trillion in one year, as the country’s crude oil earnings dipped by 15.92 per cent to N6.825 trillion in 2013.

This, according to data obtained from the Central Bank of Nigeria, CBN, is against crude earnings of N8.117 trillion recorded in 2012.

In a breakdown of the figures in the gross federation account revenue, the CBN disclosed that oil revenue for first quarter 2013 stood at N1.849 trillion, while the second, third and fourth quarter oil revenue stood at N1.813 trillion, N1.623 trillion and N1.538 trillion respectively.

This is in comparison with oil revenues of N2.376 trillion, N1.982 trillion, N1.936 trillion and N1.824 trillion for the first, second, third and fourth quarter 2012 respectively.

The decline in crude earnings was attributed to a drop in crude export, arising from rising cases of crude theft, pipeline vandalism and sabotage, among others.

Oil revenue, therefore, accounted for 70.01 per cent of the gross federally collected revenue. Total revenue collected in 2013 amounted to N9.748 trillion.

A further breakdown of oil revenue in 2014, the CBN report disclosed that the country recorded crude oil and gas sales of N1.559 trillion; petroleum profit tax/royalties — N3.719 trillion, while other unlisted component of gross revenue account for N1.547 trillion.

Budget implementation

Analysts at Cowry Asset Management Limited noted that the Nigerian economy encountered a number of challenges in the year 2013.

According to the analysts, as at September 2013, the implementation of capital projects by Ministries, Departments and Agencies (MDAs) were scored at between 35 per cent and 40 per cent by the House of Representatives.

This, the analysts said, is in addition to observed slow pace of reforms, particularly in the petroleum industry.

“The Petroleum Industry Bill (PIB), which seeks reforms in both regulation and fiscal aspects of the oil and gas industry, is yet to be passed.

“The country continued to witnessed sub-optimal activities in the upstream petroleum activities as multinationals divest from their oil fields even as oil bunkering activities lingered to the tune of 400,000 barrels a day,” they said.

The analysts attributed the decline in crude revenue to supply disruptions caused by divestment and/or paucity of investments by international oil companies owing to the non-passage of the PIB, corruption and incessant oil bunkering activities amongst others.

Also, analysts at Partnership Investment Company Limited expressed concerns that despite strong oil prices in 2013, Nigeria was not able to improve on its fiscal savings.

The lack of fiscal savings, the analysts said, negatively affected the country’s foreign reserves accretion, especially as the huge earnings did not translate to higher reserves.

According to the analysts, considering the huge earnings from oil, which sold above $100 per barrels for much of the year, the decline in the reserves sheds more light on the country’s fiscal management and monetary policies.

On the outlook for 2014, they said, “By far the biggest challenge that will confront the country in 2014 is the management of the country’s earnings. In 2013, despite huge earnings on the back of improved crude oil output and high prices, the mismatch in fiscal and monetary outlook took off most of the shine that would have accrued to the country.”

Source: Vanguard

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