Treasury’s $195.11b oil receipt covers 2017 to 2021
By Jeph Ajobaju, Chief Copy Editor
Oil receipts clicked $195.11 billion, more than 50 per cent federal revenue and over 80 per cent foreign exchange (forex or FX) earnings in the past five years, but losses are far greater as 95 per cent of oil production is being stolen.
Gross Domestic Product (GDP) is estimated at $174.02 billion (N72.39 trillion: 2021 estimate), so the $195.11 billion gleaned from Central Bank of Nigeria (CBN) data from 2017 to 2021 seems like a fortune.
However, without oil theft and smuggling the treasury would have ballooned into more billions of dollars.
Nigeria is yet to gain from oil price rises over the past month. Brent crude hit $120 per barrel (pb) in March amid the country’s decreasing forex earnings because of its inability to meet oil production quota.
Daily crude production averaged 2.085 million barrel per day (bpd) in March, the month UBA Chairman Tony Elumelu tweeted that Nigeria now loses over 95 per cent of its oil production to thieves.
Elumelu said Bonny Terminal is supposed to receive over 200,000 bpd but gets 3,000 barrels, causing Shell to divest its operations from Nigeria.
Austin Avuru, former Seplat Energy Managing Director/Chief Executive Officer now AA Holdings Executive Chairman, has also warned that oil production is in a state of emergency as thieves steal 80 per cent of what oil wells send to terminals.
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Loss of $107.98m per day
National Bureau of Statistics (NBS) data shows oil production averaged 1.6 million bpd in 2021. Losing 95 per cent of it means losing at least $107.98 million a day in exports (at average $71.04 pb of Brent), according to Nairametrics reporting.
Nigerian Upstream Petroleum Regulatory Commission (NUPRC) CEO Gbenga Komolafe released figures that show more than 115,000 bpd were lost between January 2021 and February 2022, valued at $3.27 billion.
However, these represent only about 7.6 per cent of 1.5 million bpd, and are contrary to the assertions of Tony Elumelu and Austin Avuru, both of whom are oil industry operators.
Despite the discrepancy, it is certain that Nigeria loses huge sums daily to oil bunkering and pipeline vandalism that cause environmental degradation in the Niger Delta and affect its economy due to oil spillages.
Nigeria in foreign investment chill
Petroleum Resources Minister of State Timipre Sylva told European Union (EU) delegation in March that Nigeria received only $3.5 billion of the over $70 billion foreign oil investment that came to Africa between 2012 and 2022.
Sylva said Tanzania received about $30 billion in the period, Rovuma Basin offshore Mozambique $4.7 billion, and Damerjog in Djibouti $4 billion
CBN data shows that Nigeria’s oil and gas sector received $668.74 million as foreign investment between 2017 and 2021, just 1 per cent of total capital inflow in the five years. Even existing investors are reportedly seeking an exit.
Buhari charges agencies to end oil theft
President Mohammadu Buhari has charged Sylva, Nigerian National Petroleum Company (NNPC) Managing Director Mele Kyari, and Chief of Defence Staff General Lucky Irabor to block oil theft.
“There are three elements to the solution of this problem,” Sylva explained.
“The communities must be involved because the people who are engaged in these illegal activities are not ghosts. They are from communities. So, the communities have to be involved.
“You the security also must be involved because you are the law enforcement arm of government. And, of course, we as part of the government must be involved. And then the third arm is the operating companies.
“All the elements are complete now, we are here as government, the operating companies are here and, of course, we are going to the communities. So, I believe that finally this problem will be resolved.”
Forex squeeze
Nigeria is in dire need of FX inflows as external reserves continue to strain from constant CBN intervention in the official forex market in which it sold over $18 billion to various forex windows in 2021.
CBN figures show that foreign reserves dipped by $815.54 million year-to-date and naira at the parallel market depreciated 4.1 per cent.