Nigeria’s Oil Earnings dipped by 55% to $24.8b in 2015, says NEITI

Nigeria’s oil and gas revenues plunged from $54.5 billion in 2014 to $24.8 billion in 2015, while the country’s oil production fell from 798 million barrels in 2014 to 776 million barrels in 2015, a new oil and gas audit report of the Nigeria Extractive Industries Transparency Initiative (NEITI) has said.

The report, tagged, ‘NEITI 2015 oil and gas industry audit report’, noted that the total outstanding revenue from the sector as at 2015 was $3.7 billion and N80 billion, while losses incurred stood at $2.2 billion and N60 billion, and un-reconciled revenues amounted to N317 billion.

In his response to the findings of the report, the Executive Secretary of NEITI, Waziri Adio explained that the 54.6% decline in oil revenues resulted into a slight 2.7% fall in oil production, adding, “this was due to drastic reduction in the unit price of crude oil in the global market.”

Oil and gas revenues have been declining since 2011 when total revenues peaked at $68.4b. A five-year analysis in the report reveals that revenues declined by 8%, 7.7% and 6% in 2012, 2013 and 2014 respectively.

According to the report, the total oil lifted in 2015 was 780 million barrels, about four million barrels higher than the amount produced with the balance drawn from previous years. Of the 780 million barrels, the companies lifted 467 million barrels while NNPC lifted 313 million barrels.

It also noted that while NNPC has always confirmed receipt of the payments, it has never shown evidence of remittance to either the Federal Government or to the Federation Account.

NNPC maintains that it has authorization from the presidency to hold the dividends in trust and utilize as directed by the government.

NEITI recommends that NNPC should provide documentary evidence of the authorization to hold the money in trust and to give account of the expenditure from and the status of the $16.8 billion collected in 16 years.

When combined with the closing balance for the previous year and with allowance made for liability acknowledged and upfront deductions by NNPC, there was an un-reconciled sum of N317 billion from the value of crude allocated for domestic consumption. NNPC acknowledges having a liability of N418 billion as at 31st December 2015.

Also, NNPC deducted the following upfront from domestic crude account: N60.9 billion for losses; N316.7 billion for subsidy; and N112 billion for repairs and maintenance.

A breakdown of the repairs and maintenance expenses shows that N24.2 billion was spent on crude movements; N22.1 billion on fund releases for salaries; N15.6 billion on demurrage; N13.2 billion on share of upfront; N11.37 billion on product distribution; N10.5 billion on through/marine; N4.12 billion on facility repairs; N3.27 billion on operations; N1.9 billion on security; and N1.3 billion on projects, among others.

NEITI recommends that upfront deductions should be discontinued and that NNPC should settle its liabilities and reconcile the un-reconciled amount. NEITI also recommends that detailed records of losses and repairs be kept to ensure transparency and accountability.

NEITI recommends that NPDC should pay its outstanding liabilities and that the basis of the revaluation and mode of payment of the divested assets be examined to ensure that the Federation is not short-changed, insisting that the federal government must demand explanations on the dividends.

Meanwhile, motorists, who spoke with The Guardian in Abuja yesterday, said they pay more to get fuel as most filling stations have altered their pumps while others sell above pegged the price of N145 per litre.

However, the Group Managing Director of NNPC Maikanti Baru was optimistic that current crisis would be addressed before the coming weeks.