FG records N1.43tn drop in crude oil sales

Minister of Finance, Dr. Ngozi Okonjo-Iweala
| credits: blogs.cfr.org

The Federal Government recorded a decline of N1.43tn in crude oil sales in the 2013 fiscal period, a document obtained from the Budget Office of the Federation has revealed.

The BOF in its 2013 consolidated budget implementation report jointly signed by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, and the Director-General, BOF, Dr Bright Okogu, said that crude oil sales dropped by 33.69 per cent from N4.24tn in 2012 to N2.81tn.

Similarly, it said gas sales of N255.12bn and Brent of N180m fell below their corresponding annual projections of N359.58bn and N880m by N104.46bn (29.05 per cent) and N0.70bn (or 79.67 per cent), respectively.

The report, which was obtained on Thursday, blamed the decline in the oil revenue on crude theft, illegal bunkering, pipeline vandalism, which it stated persisted during the period under review.

It said, “The volume of oil lifted in the period also fell short of the 2.26 million barrels per day and 2.2mbpd recorded in the third quarter of 2013 and the fourth quarter of 2012 by 0.11mbpd and 0.05mbpd, respectively.

“The drop in the volume of oil lifted during the quarter could be ascribed to supply challenges following continued crude oil theft, illegal bunkering and pipeline vandalism that had persisted in the period,” the report stated.

It, however, said that unlike crude oil lifting, the gross royalties (oil and gas) of N982.98bn, gas flared penalty of N3.19bn, petroleum profit tax of N2.73tn and other oil and gas revenue of N4.04bn exceeded their respective annual projections of N761.08bn, N2.48bn, N2.36tn and N3.07bn by N221.90bn (or 29.16 per cent), N0.71bn (or 28.44 per cent), N372.82bn (or 15.78 per cent) and N0.97bn (or 31.49 per cent), respectively.

On the performance of the non oil sector, the report put the aggregate non-oil receipts as of December 2013 at N2.21tn.

This, it stated, depicted a shortfall of N637.93bn (or 22.37 per cent) below the annual projected estimate of N2.85tn.

The performance, according to the report, showed that all the non-oil revenue items fell below their respective annual estimates.

For instance, it stated that Value Added Tax of N795.60bn, company income tax of n985.52bn and customs and excise duties of N432.64bn all fell short by N149.68bn (or 15.83 per cent), N6.52bn (or 0.66 per cent) and N360.31bn (or 45.44 per cent) when compared with their annual projections of N945.28bn, N992.04bn and N792.95bn, respectively.

It, however, explained that in line with the recent trend, revenue collections in these categories were expected to improve since a significant proportion of these revenue receipts mature at the tail end of the year.

It said, “In recent times, the government through the Budget Office of the Federation and the Federal Ministry of Finance has taken different measures aimed at improving non-oil revenue collection and payment to the treasury.

“The effects of these measures as well as the Budget Office’s regular engagement with the agencies have led to the continued growth in targets and actual revenues from the non-oil sector. This trend is expected to continue over the 2012 – 2015 period.”

But speaking on the country’s revenue structure, the Chairman, Forum of Commissioners, Federation Account Allocation Committee, Mr. Timothy Odaah, said there was a need to diversify the economy away from oil.

He said the present economic realities had made it imperative to shift the revenue base away from oil since the current dependence on oil revenue was no longer sustainable.

For instance, he said countries such as the United States and China had announced a massive cut in their importation of crude oil from Nigeria.

He said the cut in oil importation from those countries, which were some of the highest trading partners to Nigeria as well as the discovery of shale oil should be a pointer to the government that oil revenue was seriously under threat.

He said, “Our focus on oil is making our economic activities to be monolithic and it is like we are putting all of our eggs in one basket; and when there is a crack, it will affect all.

“So all states, especially now that we don’t have enough funds, should embark on projects that are revenue-yielding for the purpose of creating employment that will reduce the cases of this crisis that we have.

“There is nobody who is gainfully employed that will like to get involved in Boko Haram activities. Employment is necessary but it cannot come if we don’t have income. We should transform the pattern of our industrialisation, pattern of our investments and that is the only way it will help.”