The group managing director of the Nigerian National Petroleum Corporation (NNPC), Engr. Andrew
Yakubu, has admitted that the persistent attacks on major crude oil arteries are having a negative impact on the nation’s revenue. Continuous crude oil theft, pipeline vandalism and shut-ins have constrained the sector from meeting its revenue projection, he said.
Yakubu, who decried the persistent attacks on major pipeline arteries supplying crude oil to export terminals, during his submission to the Senate and House of Representatives Joint Committee on the Medium-Term Expenditure Framework (MTEF) for the period of 2014 to 2016, stressed that the
menace has impacted negatively on the nation’s economy.
The oil and gas sector is a key component of MTEF, he said, adding that any impact on it will have a negative effect on revenue flow to the federation account.
He said: “The critical and most important point to note here is that when the artery conveying crude oil to the terminals is hit, this reduces our production volume by 150,000 barrels per day and, for the period that the line is down, that accounts for the drop in crude oil production.
“From February to date, we have witnessed so much breaches and each time we go down about 150,000bpd goes down.
“We have looked at the 2014 oil projection from a realistic point of view and we would continue to recalibrate it with the National Assembly and other relevant stakeholders to ensure that the petroleum sector continues to play a key role in the national economy.”
On the daily crude oil production figure, Yakubu averred that the production figure has been very erratic as a result of the several attacks on the arteries from February to date, adding that the daily crude oil production figure presently ranges between 2.2mpbd and 2.3mbpd.
He said that the NNPC actively participated with the Budget Office in arriving at the MTEF, adding that the corporation would do everything possible to ensure that MTEF is achieved in terms of accruals from oil and gas projected input.
For his part, the director-general, Budget Office, Dr Bright Okogu, affirmed that the activities of crude oil theft and pipeline vandalism coupled with the discovery of shale oil and gas were responsible for the inability of the NNPC to realise the projected 2.5mbpd crude oil production in 2013.
‘Nigeria is not broke’
Meanwhile, key government outfits yesterday reiterated the position of the coordinating minister for the economy and minister finance, Dr Ngozi Okonjo-Iweala, on the state of the economy.
“Nigeria is not broke”, chorused the DG, Budget Office of the Federation, Dr Bright Okogu, accountant-general of the federation Mr Jonah Otunla and a deputy governor in the Central Bank of Nigeria (CBN), Mrs Sara Omotunde Alade, in a response to the National Assembly Joint Committee on Finance meeting on the 2014-2016 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
“Nigeria is not broke. We may have cash flow problems from time to time but that does not translate to Nigeria being broke,” Okogu stated.
The DG cited countries like Greece and Spain which had recently sought bailouts. “We (Nigeria) are nowhere near that situation,” he stated in reference to the state of the economy.
AGF: “We have cash flow problem but the country is not broke. The DG Budget Office has said that and I strongly affirm that.
CBN: “We are bankers to the government. There is money in the account. The relevant agencies have said we are not broke and we (CBN) agree with them.”
Committee members in wide ranging contributions at the meeting queried the executive among others on “discretionary waivers”, the crude oil benchmark and the contentious “envelope system” adopted for government ministries, departments and agencies (MDAs) – all key components of the 2014-2016 MTEF/FSP.
The 2014-2016 MTEF/FSP fixed crude oil benchmark for the yet-to-be-presented 2014 budget at $74 per barrel.
For debt service, the 2014-2016 MTEF/FSP submitted by President Jonathan earmarked N663.6 billion and N48 billion was earmarked for domestic and foreign debt service, totalling N712 billion.
Under the “Federally Collectible Revenue” category, the federal government is projecting to earn N10,519 trillion for 2014. A breakdown reads: gross oil revenue (N6,814 trillion), gross non-oil revenue (N3,288 trillion), non-federation account levies for targeted expenditure (N250 billion), education tax (N156 billion) and National Information Technology Development Fund (N9.390 billion).
The oil benchmark price of $75 per barrel arrived at for the 2013-2015 fiscal years was the subject of intense horse-trading between the executive and the National Assembly. A $79 per barrel oil benchmark was later agreed for the 2013 budget.
The 2014-2016 MTEF/FSP signaled increasing threat to Nigeria’s crude oil revenue from emerging competitors – global and regional – viz-a-viz dwindling demand for Nigeria’s crude oil, chiefly by the US.