Nigeria loses N1.1trillion oil revenue due to Niger Delta attacks
Nigeria has lost over N1.1 trillion in oil revenues in the last five months
This is due to militants’ attacks on oil installations in the oil-rich Niger Delta region
The figure does not include losses in gas revenues resulting from disruptions in gas supplies
A report by Daily Trust indicates that Nigeria has lost over N1.1 trillion in oil revenues since the resurgence of militancy in the oil-rich Niger Delta region.
The report stated oil installations in the region has been attacked 28 times between February 10, 2016 and end of last month by the rampaging militants.
Niger Delta militants have been disrupting oil production in the oil-rich region
This figure does not include losses in gas revenues resulting from disruptions in gas supplie s to domestic power and industrial plants as well as export markets.
Nigeria is currently struggling to maintain its crude oil production following a spate of militant attacks. Militant group, Niger Delta Avengers continue to disrupt oil production which in turn, affects the Nigerian economy.
Nigeria is largely dependent on proceeds from oil to fund the budget but the resurgence of militancy in the Niger Delta region has affected the country’s finances.
The 2016 budget is based on daily crude production of 2.2 million barrels per day but the attacks pushed output down by about a third between April and August 29.
Production dropped by 300,000 bpd in April. In May, production went down from 600,000 bpd to 1.5m bpd. In June, it dropped by 700,000 bpd, 700,000 bpd in July and last Thursday output was down to around 1.4m bpd with 800,000 bpd lost.
At an average oil price of $42.01 and 46.94/barrel and exchange rate of N197/$ in April and May, Nigeria was denied crude oil revenues valued at $378m or a Naira equivalent of N75billion and N171billion respectively.
The average price of crude oil in June and July were $48.79 and N41.37 per barrel, while the value of the local currency was estimated at N285 and N292 to a dollar. Nigeria was therefore denied crude oil revenue valued at N292billion and N262billion respectively.
At about $48.31/barrel and N305 exchange rate, an estimated $112m or N341billionn has been lost in the last 29 days of August. This puts the total crude oil (excluding gas) revenue shortfall between April and August 29 at N1.14trillion.
The Niger Delta Avengers attacks have cut Nigeria’s output to the lowest in almost 30 years, threatening the projected N820billion oil revenue proposed in the budget for this year.
Also, in the last five months, supply disruptions have significantly affected the country’s oil exports as four of the nation’s five largest export streams have been totally suspended.
At the moment, Forcados, Qua Iboe , Bonny Light and Brass River are under force majeure, a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
The federal government has already informed Nigerians that it will result to borrowing to fund the 2016 budget due to the situation.
The government is already in the the process of appointing two lead managers and a financial adviser to organize the issuance of $1 billion of Eurobonds this year.
According to the Debt Management Office (DMO), the sale is the first tranche of a $4.5 billion Nigeria Global Medium-Term Notes Issuance Programme that runs through 2018.
The government is also in talks with the Chinese import-export bank – China Exim Bank for a $21 billion loan to finance the budget and develop new infrastructure projects.
The situation is even more worrisome for states. Recently, some states had to go home empty after their statutory allocation was all deducted to service their debts.
About N32 billion was deducted from states allocations from the Federation Account in April for different loans they incurred.
Majority of the states across the country are now struggling with payment of workers salaries and projects execution.
The situation has also led to Nigeria losing its status as Africa’s biggest economy. South Africa has overtaken Nigeria as Africa’s biggest economy in dollar terms.
Nigeria’s minister of finance, Mrs Kemi Adeosun had informed the Nigerian Senate last month that the country is “technically in recession”.
Mean while, renowned economist and businessman, Mr Atedo Peterside has predicted that the recession currently experienced in Nigeria will last for a long time.
Peterside who is also the President & Founder of Anap Foundation said business confidence is low and investors are holding back on investing in Nigeria.