Oil majors take lion’s share of N84trilion proceeds in five years | Nigeria Newspaper- Nigeria News| Naija News

25.6.18

Oil majors take lion’s share of N84trilion proceeds in five years

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Oil majors take lion’s share of N84tr proceeds in five years
Although oil has always been described as Nigeria’s core mineral wealth, fresh statistics show that industry operators might be the main beneficiaries from the sector. The petroleum industry earned $276.642 billion (N84.6 trillion) in the last five years. Only N8.41 trillion of the sum, however, was spent on budget from 2013 to 2017.The disclosure was contained in the recent 2018 Statistical Bulletin released by the Organisation of Petroleum Exporting Countries (OPEC).
Petroleum export, on the decrease in the last five years, has negatively affected the country’s revenue generation. A breakdown of the country’s crude oil revenue, for instance, showed a drop from $90.546 billion in 2013 to $78.053 billion in 2014; $41.818 billion in 2015; $27.788 billion in 2016 and $38.607 billion by the end of 2017.The Federal Government’s actual share of oil-related revenue was N1.99 trillion in 2013; N1.98 trillion in 2014; N1.64 trillion in 2015; N820 billion in 2016 and N1.98 trillion in 2017.Nigeria’s total budget within the period under review was N28.147 trillion.
This shows that a little proportion of Nigeria’s oil earnings was actually spent on budget funding, while a larger chunk went to the operators.There is growing concern over challenges of sustainability, transparency, and accountability of transactions in the oil industry.Nigeria, for example, is still beset by lack of a comprehensive and independently verifiable metering infrastructure. As a result, it relies only on information provided by International Oil Companies (IOCs) or indigenous operators for production figures.
But experts, who believe Nigeria is being shortchanged, have questioned the operators’ figures, which the country has relied on since the advent of crude oil production. Besides, there have always been discrepancies between what vessels declare to Nigerian authorities and what they proclaim as originating from Nigeria at the international market.According to the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Waziri Adio, ensuring the installation of adequate metering infrastructure in oil and gas sector operations is top on the agency’s agenda.He said due to an inadequate metering system, an accurate measurement of crude production and lifting and appropriate computation of taxes and royalties have been difficult, leading to a huge revenue loss to Nigeria.
“Metering is an issue that is very dear to us. NEITI has long established this in its first audit of the sector. Since then, we have been pushing. And we will continue to push, until the issue is addressed,” he added.A former Minister of State for Petroleum Resources, Mr. Odein Ajumogobia, questioned the authenticity of data provided in the country’s oil sector, especially on production levels and reserves.He believed this problem could be solved if recommendations such as the use of multi-phased, calibrated meters at oil well heads and flow stations, and export terminals are adhered to.He insisted on the need to invest, not only in metering infrastructure, but also in digital command centres where regulatory agencies could monitor the status of the oil assets in real time.
For Adeola Adenikinju, Professor of Energy Economics, Faculty of Social Sciences, University of Ibadan, the Federal Government needs to integrate the oil sector with the rest of the economy, ensuring that energy resources are used to meet local domestic demands first.He stressed the need to apply economic principles for efficient management of the energy sector and for pricing policy. Government should also take care of the sector through adequate investment and provision of an environment conducive to public investment.
Adenikinju noted that government has to develop strong institutions and governance structure as important agents of restraint, to contain the excesses of oil sector operators.“There is the need to ensure that host communities where oil is found, explored and produced become partakers of the oil profit. You shall not allow foreigners to dominate your oil sector, because of divergence of economic interests,” he warned.He further described Nigeria’s oil resources as Dutch disease, which brought along economic distortions, corruption and weakening of state institutions. These, he said, should be prevented or kept at a level where their damaging impacts on economic development would be minimal.
He added that there is no link between the country’s energy resource endowments and exploitation and its global ranking on key economic, social and institutional indicators. Emphasising the need to diversify the economy, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said he expects the nation’s economy to rise in world rankings to top 10 by 2050, with a projected GDP of $6.4 trillion, surpassing Germany, the United Kingdom, France and Saudi Arabia.
Nigeria’s intrinsic potential lies beyond oil, he said, stressing that harnessing it has become imperative. He said that based on recent trends, the report reviews the impact of low oil prices on key economic indicators and the real sector through an industry survey. He identified agriculture, petroleum (petrochemical and refining), retail, and ICT as priority sectors with the most dominant transmission links to the overall economy.
“These sectors in the medium-to-long term are key to boosting other sectors like manufacturing. Forward linkages to agro-processing and other services such as logistics, as well as backward integration to input supply sectors, could improve farm incomes, increase employment and improve domestic food security. Potentially, Nigeria’s global agriculture exports could take off at a rate similar to Brazil’s, with $59 billion in export revenues by 2030,” he added.

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