Despite the steady rise in crude oil price, the country’s earnings from the commodity dropped for the fourth month. This was contained in a Central Bank of Nigeria’s (CBN’s) latest monthly economic report for January 2022.
According to the CBN data, the country earned N945 billion in January- representing 7.8 per cent less than the N1.024 trillion budgeted for the period.
A breakdown of the components of oil revenue showed that no revenue accrued from crude oil and gas exports in January, the second straight month the government has earned nothing from such a major income source. This is because the Nigerian National Petroleum Company (NNPC) is yet to remit funds to the joint pool of the federation account in recent months, due to rising petrol subsidy claims.
According to the data, revenue from petroleum profit tax and royalties, which forms the bulk of oil revenue, declined by 31 per cent to N247 billion compared to N360 billion the previous month and was also below the monthly target of N277 billion.
However, stakeholders are worried that even as the country’s oil blend- Bonny Light, selling as the most expensive Organisation of Petroleum Exporting Countries (OPEC) blend, Nigeria has not benefitted much in terms of revenue. On Monday, Bonny Light sold at $124.18.
According to the National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, the dip in oil revenue does not come to him as a surprise. He explained that any country paying so much for subsidy should not expect to take full advantage of the galloping price of crude in the international market.
He warned that by year end, the country may have incurred over N5 trillion in subsidy payment if the naira continues to depreciate against the dollar. “Incurring such cost is not in the best interest of the country. The best solution to curbing this revenue dip in oil is to remove subsidy, but subsidy cannot be removed now when the country is hot. There is inflation, life is difficult for the citizens, so it is very much impossible to remove subsidy.
Who, in Nigeria of today can afford to buy petrol for about N600/litre if subsidy is removed,” Osatuyi argued, adding that removing subsidy means setting the country on fire.