Nigeria: Government panics as oil revenue drops drastically

The Federal Government on Thursday raised the alarm over declining crude oil proceeds due to theft and smuggling.


It also said that the country’s production volume dropped by 17 per cent in April alone. The Minister of Finance, Dr. Ngozi Okonjo-Iweala, said this when members of the House of Representatives Committee on Finance led by Dr. Abdul-Mumini Jubrin, visited the ministry for oversight function. The country is currently exporting 1.85 million barrels of crude oil per day, representing a drop from the 1.87 million bpd loaded in March and 1.96 million bpd projection for April. Addressing the lawmakers, the Okonjo-Iweala, said despite the drop in production, the country was not broke as its reserves had been on the upward swing in the past few months.


According to her, the country’s reserves currently stand at $36.8bn. She said, “There is no such thing as a financial crisis in the country. We have been having some issues with delay in money being disbursed on time for the Federation Account Allocation Committee’s meeting to hold. “Nigeria is solvent. We have many assets, we are liquid. Everybody experiences this kind of situation from time to time, and when this happens, what do you do? You either look for other sources of fund or you adjust and wait for the money to come, and that is what we have been doing.


“The main challenge that we are facing is that of declining crude oil output as a result of theft and smuggling. This is what we need to tackle because that has a direct impact on what we earn. “Mr. President is taking all measures to curtail this phenomenon. For instance, in April, production dropped by 17 per cent. We need to face this challenge squarely.”


Okonjo-Iweala said the delay being experienced by the country in receiving crude oil proceeds from the international market was not strange, adding that such development should be expected since the economy was dependent on oil revenue. “Nigeria is not broke. We have delays in money being disbursed, we are depending on a resource we sell in the market, we may not get the money right away, we sometimes have to wait for few days.”


The Minister said President Goodluck Jonathan had put in place, security measures towards addressing crude oil theft and smuggling.


The minister solicited the assistance of the committee in ensuring the speedy passage of the bills on External Borrowing Plan and the Customs Reform Acts currently before the National Assembly. She said the speedy passage of the EBPA would enable the government access the $7.9bn external loan planned for the 2012 fiscal year. Also speaking at the event, the Minister of State for Finance, Dr. Yerima Ngama, said the delay in disbursing federal allocations to states was “temporal.” He said, “Last year, we used to hold FAAC on 18 and 19 of every month, then we set a higher target for ourselves to hold it earlier. But that expectation could not be met; so, we have returned to the same date as before. “Employees of government ministries, departments and agencies should ordinarily get their salaries at least three days after FAAC; now it sometimes gets delayed into the next month. The delay in paying salaries after FAAC is only temporary because we are changing the way we pay salaries.”


Responding, Jubrin expressed fears over government’s huge budget deficit, adding that there was the need for all revenue generating agencies of government to improve their capacities.

The economy appears to be in dire straits

the government is making moves to borrow some $7.9 billion