Nigeria's Oil Revenue Falls by N693.0bn amid Production Difficulties, Rising Cost of Fuel Subsidy

• The price of crude oil in the international market averaged US$68.83 per barrel in the second quarter of 2021
• This is US$7.93 per barrel (13.12 percent) higher than the US$60.90 per barrel reported in the first quarter of 2021
• Despite oil prices higher than the $40 benchmark in 2021 budget, the federal says it recorded revenue shortfalls

The Nigerian government has revealed that the country struggled to export enough fuel in the first six months of 2021, and this resulted in a significant drop in its revenue to the tune of N693.0 billion.

In a report published by the budget office on Tuesday, 5 October 2021, the federal government blamed low production as the reason why Nigeria could not make gains from increasing oil prices at the international market.

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The report titled 2021 Second Quarter and Half Year Budget Implementation shows that the average oil production in the second quarter of 2021 decreased to 1.61mbpd representing a 0.25mbpd (13.44 percent) fall from the 1.86mbpd benchmark for the 2021 Budget.

Part of the report reads:

"The volume of oil production in the period was also 0.11mbpd (6.40 percent) and 0.20mbpd (11.05 percent) below 1.72mbpd and 1.81mbpd recorded in the first quarter of 2021 and second quarter of 2020 respectively."

Due to the reported drop in production, only N1.89 trillion was collected in the first half of 2021, therefore, fall short of the N2.59 trillion budget projection for the period.

"This denotes a decrease of ₦693.0 billion (26.73 percent) and ₦398.69 billion (17.35 percent) below the 2021 half year budget estimate and half year actual gross oil revenue recorded in 2020 respectively."

Should Nigeria had relied heavily on oil revenue, running the country would have been much harder for President Muhammdu Buhari.

As the report showed that gross non-oil revenue in the first half of the year exceeded what was planned.

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Non-oil revenues are majorly company income tax, customs and excise duties, value-added tax

According to the report, Nigeria earned N2.44trillion an increase of N147.43 billion (6.41 percent) above the half year’s estimate of N2.30trillion.

The net distributable revenue however stood at N3.38 trillion in the first half of 2021, representing a shortfall of N836.60 billion (19.84 percent) on higher oil revenue deductions.

NNPC says 100% of Petrol Consumed in the Country are Imported

Legit.ng had earlier reported that on yearly basis, National Petroleum Corporation (NNPC) commits billions to pay the salaries and emoluments of its refineries workers.

The NNPC refineries have a combined capacity to refine 445,000 barrels of oil per day but continue to rely on importation to meet demands.

In fact, the federal government recently committed $1.5 billion(over N600bn) for the rehabilitation of the Port Harcourt refinery.

Source: Legit.ng