Nigeria’s oil revenue rises by 129% to N9.4trn in 2018 …Records N3.4trn deficit

Damilola Shittu with Agency Report

Nigeria’s oil revenue shop up by 129 per cent to N9.4 trillion in 2018 buoyed by increased crude oil price.

Investigations revealed that average price of Nigeria’s crude oil; Bonny Light rose by 26 per cent to $70.66 per barrel in 2018 from $52.51 per barrel in 2017. Indication that this trend will persist this year emerged yesterday when the price of crude oil, rose to $63.02 per barrel from $60 per barrel, representing $3 above the nation’s budget benchmark of $60 per barrel.

According to the economic report for the fourth quarter of 2018 (Q4’18) released by the Central Bank of Nigeria (CBN) yesterday, total oil revenue rose by 129 percent to N9.4 trillion in 2018 from N4.1 trillion in 2017. Non oil revenue also rose by 21 per cent to N3.9 trillion from N3.2 trillion in 2017.

Consequently oil revenue accounted for 71 per cent of the total federally collected revenue which rose by 82 percent to N13.3 trillion in 2018 from N7.3 trillion in 2017.

However, total federally collected revenue fell by 4.8 per cent to N2.4 trillion in Q4’18 due to decline in non oil revenue. The report said: “At N2.41 trillion, federally-collected revenue in the fourth quarter of 2018, was lower than the proportionate quarterly budget estimate of N3.32 trillion billion by 27.4 per cent. It also, fell below the receipts in the preceding quarter by 4.8 per cent. “The decline in federally-collected revenue (gross) relative to the proportionate quarterly budget estimate was attributed to the shortfall in receipts from both oil and non-oil revenue components during the review period Gross oil receipt, at N1.46 trillion or 60.7 per cent of the total revenue, was below the proportionate quarterly budget estimate by 23.7 per cent, but higher than receipts in the third quarter of 2018 by 5.1 per cent.

Despite the increase in crude oil price, oil revenue declined relative to the proportionate budget owing to shortfalls in crude oil production and exports, arising from maintenance at various NNPC terminals. “Non-oil revenue, at N946.90 billion or 67.6 per cent of the total, was below the proportionate quarterly budget estimate of N1.4 trillion and the level in the preceding quarter by 32.4 per cent and 17.0 per cent, respectively.

According to the News Agency of Nigeria (NAN), the lower non-oil revenue relative to the proportionate quarterly budget estimate was due to the shortfalls in receipts from Federal Government Independent Revenue and VAT in the review period”.

FG records N3.4 trillion deficits in 2018 Meanwhile the federal government recorded N3.4 trillion deficits in 2018, representing 59 per cent when compared with the deficit of N2.14 trillion recorded in 2017. The CBN Q4’18 economic report also revealed that deficit rose to N910 billion during the quarter, representing percent from N855.09 per cent recorded in Q3’18.

The CBN said: “Federal Government retained revenue for the fourth quarter of 2018 was estimated at N916.44 billion. This was below the proportionate quarterly budget estimate and the receipts in the preceding quarter by 51.5 per cent and 11.5 per cent, respectively. Of the total revenue, Federation Account accounted for 90.4 per cent, while VAT, Excess crude/PPT, Federal Government Independent Revenue, Excess Non-oil and Exchange Gain accounted for 4.3, 3.5, 1.4, 0.3 and 0.1 per cent, respectively “The estimated Federal Government expenditure for the fourth quarter of 2018 stood at N1.83 trillion and was below the proportionate quarterly budget estimate of N2.38 trillion by 23.1 per cent and the level in the preceding quarter by 3.4 per cent.

A breakdown of the total expenditure showed that the recurrent component accounted for 87.8 per cent, while capital and statutory transfers accounted for 5.9 and 6.3 per cent, respectively. A further breakdown of the recurrent expenditure showed that the non-debt component accounted for 53.8 per cent, while debt service payments was 46.2 per cent Thus, the fiscal operations of the Federal Government resulted in an estimated deficit of N910.41 billion, compared with the proportionate quarterly budget deficit of N488.62 billion.”

Oil price rises to $63.02, $3.00 in excess of 2019 budget benchmark
The rise in price was attributed to the efforts of the Organisation of Petroleum Exporting Countries (OPEC) to remove excess oil from the volatile market. Specifically, the prices of Brent, West Texas Intermediate, WTI and of OPEC Basket stood at $63.02, $55.26 and $60.93 respectively.

In its recent report, OPEC that expects increased stability in the market stated: “The Joint Ministerial Monitoring Committee (JMMC) has expressed its utmost satisfaction with the steady and robust achievements of the two-year old ‘Declaration of Cooperation’ between OPEC and participating non-OPEC oil producing countries.

“The JMMC noted that countries participating in the ‘Declaration of Cooperation’ achieved an overall conformity level in November 2018 of slightly below 100 per cent, hitting 98 per cent for the month. “It is evident that significant progress has been made towards the goal set at the 4th OPEC and non-OPEC Ministerial Meeting of 23 June 2018, whereby countries agreed to strive to adhere to the overall conformity level, voluntarily adjusted to 100 per cent, as of 1 July 2018 for the remaining duration of 2018. “The overall conformity level since the beginning of the ‘Declaration of Cooperation’ in January 2017 is well above 100 per cent, coming in at 116 per cent.

“The Committee confirmed the attached new voluntary production adjustments effective as of 1st of January 2019 for an initial period of six months, based on the unanimous decisions taken at the 175th Meeting of the OPEC Conference and the 5th OPEC and non-OPEC Ministerial Meeting on 7 December 2018.”

It stated: “These voluntary production adjustments will continue to be monitored by the JMMC on a monthly basis, ably supported by the Joint Technical Committee and the OPEC Secretariat, in an open and transparent manner. “The JMMC calls on all participating countries of the ‘Declaration of Cooperation’ to redouble their efforts in the full and timely implementation of the supply adjustments to ensure that the oil market remains in balance in 2019.”

However, in his budget presentation to the National Assembly, President Muhammadu Buhari had stated: “The 2019 Budget Proposal is intended to further place the economy on the path of inclusive, diversified and sustainable growth in order to continue to lift significant numbers of our citizens out of poverty. “The underlying drivers of the 2019 revenue projections have been adjusted to reflect current realities.

On the expenditure side, allocations to Ministries, Departments and Agencies of Government were guided by the three objectives of the ERGP, which are, (i) Restoring and Sustaining Growth; (ii) Investing in our People and (iii) Building a Globally Competitive Economy.”

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