February 25, 2024

Nigeria crude oil, gas sales net N486 billion in first quarter, 2023

 

Oredola Adeola

 

Nigeria’s crude oil and gas sales netted N486 billion in the first quarter of 2023, according to the distributable revenue released by the Budget Office of the Federation, Ministry of Budget and Economic Planning, for first quarter, 2023 (Q1,2023).

 

 

The document obtained by EnergyDay from the Budget Office of the Federation, Ministry of Budget and Economic Planning, for first quarter, 2023 (Q1,2023) revealed that a total of N486 billion was remitted to the Federation Account in the period under review.

 

 

According to the document the net oil revenue of N486.26 billion was remitted to the Federation Account (FAAC) after N258.89 billion 13 percent derivation was deducted from the N745.15 billion net oil revenue after first-line charges.

 

 

A breakdown of the data showed that, in the first quarter of 2023, the country recorded N283.14 billion as gross profit from crude oil and gas sales, N1,015.62 billion as Petroleum Profit Tax (PPT) and gas income based on 30 percent Companies Income Tax Act (CITA), N602.78 billion as Oil and gas royalties, while concessional rentals was N45 million.

 

 

The data also showed that the country earned N18.88 billion as Gas flare penalty, N51.64 billion as incidental oil revenue (royalty recovery and marginal field licenses), N3.85 billion as Miscellaneous (pipeline fee), and also earned N16.09 billion as exchange rate gain with a sub-total of N1,991.46 billion.

 

 

A total of N392.23 billion was earmarked as Fiscal deduction (Base JV CASH CALL + EF+ MCA+ RA), while N1,246.31 billion was deducted for Federally funded upstream projects.

 

 

The total revenue that therefore went into the Federation Account from the oil and gas sector was N486.26 billion in Q1,2023.

 

 

On Quarter-Quarter basis, EnergyDay gathered that the revenue from oil & gas received by Federation Account (FAAC) increased from N340.49 billion in Q1,2022, to N486.26 billion in Q1, 2023.

 

 

The variance of the country’s actual 2023 Q1 versus quarterly budget was N696.96 billion, which represents a decrease of 58.90%.

 

 

In reaction to this document, Kalu Aja, a Financial Planner and Economic Strategy Consultant in his official X handle, bemoaned the country’s declining oil and gas revenue. According to him, in essence, all of Nigeria’s crude oil sales, including Gas, Royalties, etc, plus foreign exchange gains, can’t pay the salaries of federal workers without debt.

 

 

With personnel cost estimated at N978.10 billion in Q1,2023, Kalu emphasised that Nigeria has a spending crisis, insisting that the government would have to rely on debt and loan to service this cost despite incurring N912.32bn as interest on Ways and Means in the period under review excluding foreign and domestic debt.

 

 

He further stated that the Nigerian Federation (Federal, States and LGAs) get the bulk of their earnings in Q1 2003 from tax revenue.

 

Professor Wumi Iledare, Professor of Petroleum Economics and Policy Research, reacting to the quarterly contribution of the oil and gas to the federation account stated that net earnings of N0.5 trillion in one quarter is fine but that is only 2 trillion for the year representing a very low fraction of the total budget of over 10 trillion in a quarter.

According to him, interestingly, the personnel cost of nearly 1 trillion per quarter is a huge drain on infrastructure development.

He therefore suggested that the workforce needed to be rationalised for effectiveness and efficiency in governance and administration.