Economy loses over N100bn to soft oil prices, drop in export volume

The Nigerian economy in January lost about N100.8 billion to a substantial drop in crude oil prices as well as production volumes, figures released by the Federation Account Allocation Committee (FAAC) have shown.

Government gross earnings dropped to N416.096 billion in January, about N73 billion decline from N490.031 billion receipts in December and N166.8 billion lower than budgeted estimates. Crude oil prices, which today hovers around $59, dropped further from N77.53/barrel in November to $52 .34/barrel in December.

Jonah Otunla, accountant general of the federation, who confirmed these figures in a note after the FAAC meeting in Abuja, said there was also a 33 percent decrease in export volume between November and December, last year, which also translated to $159.88 million loss to government.

“The shut down and shut-in of trucks and pipe lines at various terminals continued to impact negatively on the revenue,” Otunla stated at the meeting where the three federations units shared N500.130 billion. The amount shared for January allocation was about N188.8 billion less than the budget estimate of N688.938 billion and also N80.248 billion lower than what was shared the previous month.

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The drop in revenue consequently led to the distributable statutory revenue for January dropping substantially by N166.839 billion to N416.096 billion.

But apart from oil revenue losses, non-oil income equally performed below estimates despite government assurances that it has revved up tax collection.

Value Added Tax (VAT) dropped N6.519 billion in January to N63.93 from N70.454 billion budget estimates. The earnings were equally lower than December records of NN73.466 billion by N9.531 billion.

Meanwhile, the Nigerian National Petroleum Corporation (NNPC) has paid off its earlier N776 million debt to the federation account and remitted an additional N4.419 billion, bringing the total to N5.195 billion.

The corporation also refunded N6.330 billion to the Federal Government, Otunla noted.
Bashir Yuguda, minister of state for finance, who addressed the media after the meeting attributed the drop in non oil revenue, particularly VAT, to the multiplier effect of the decline in oil prices.

“In our economy, most of the activities is oil and gas related. So, once there is a fall in the revenue frame under that, you will see other sectors being affected,” Yuguda noted.

The minister, however, assured that the government has put up structures to change the status quo, as he observed that tax revenue increased N150 billion over and above N75 billion targets by the FIRS and attest to those efforts.

He disclosed that Excess Crude Account (ECA) now stands at $2.6 billion and also some N19 billion left in the domestic component.

The commissioners of finance at the meeting showed disappointment that the NNPC was yet to come up with the repayment plans for the $1.48 billion unaccounted oil money that it owed the federation account even when the Federal Government had directed that the money be paid as quickly as possible.

The PwC report had indicted the NNPC and its subsidiary, National Petroleum Development Company (NPDC) to refund the $1.48 billion oil money to the government treasury. But the corporation has denied any wrong doing and that it was not indicted.

The commissioners insisted that the NNPC must repay the said amount and told reporters that the repayment plan would be a condition for holding the next FAAC meeting as well as approving the next allocation.