By Bassey Udo
With the Federal Government assuming an oil production capacity of 1.88 million barrels per day during the 2022 fiscal year, the Nigerian National Petroleum Company (NNPC) Limited has expressed optimism that the country would meet and exceed this target during the year.
Presenting the detailed breakdown and highlights of the approved 2022 Federal Appropriation Bill on Wednesday in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said some of the key assumptions in the Budget framework was a projected oil production capacity of about 1.88 million barrels per day and an oil benchmark price of $62 per barrel.
Reviewing the performance of the 2021 Budget in her presentation, the Minister said that although the government projected for an average oil production capacity of about 1.86 million barrels per day during the year at about $40 per barrel, the country actually realized an average of 1.56 million barrels per day at about $79.31 per barrel as at November 2021.
But in an answer to a participants question about the possibility of the country meeting its target oil production capacity in 2022, the Group Managing Director of the NNPC Limited, Mele Kyari, said he remained very optimistic of not only meeting the target, but exceeding it, despite the persisting challenge of insecurity the country was grappling with.
Although Kyari agreed the country oil production figures actually took a dive up till the close of the year, he said the government’s intervention processes in the security situation in the country were again driving up the figures.
“Three months ago, we actually came down to about 1.5 million barrels per day oil production capacity. But today, I can confirm that the figure has risen to about 1.74 million barrels per day,” he said.
Describing the situation as great development, bearing in mind the country was yet to completely overcome the security challenge, he said the expectation of the company was that the production figure would go up to 1.8 million barrels per day soon.
“We are optimistic that we will exceed that figure during the year. What we are reporting is for the whole industry. This is not just important for the country, but also the NNPC, as every production in the country is subject to taxes and royalties. We are making sure that the portion for the IOCs (international oil companies) literally translates to more taxes and royalties for the country,” he said.
Although Nigeria’s total oil production capacity is put at about 2.5 million barrels per day, current (year to date) crude production
is about 1.6 million barrels per day, consisting of about 1.4 million barrels per day (slightly short of the OPEC+ production quota), with addition of another 300,000 barrels per day of condensates, which is usual not captured as part of OPEC output computation.
In her review of the 2021 Budget performance during her presentation, the Minister of Finance disclosed that about N970.33 billion was realized as oil revenue between January and November 2021 out of a pro-rata projection figure of N1.84trillion expected in the approved Budget for the year. The performance, she said fell short of the target by about N873.11 billion, about 47.4 percent variance during the year.
In the 2022 Appropriation Bill, the Minister said the projected revenue passed by the National Assembly as share of oil revenue for the year was about N3.36 trillion, which is higher by N1.35 trillion than the approved figure of N2.022 trillion in the 2021 Budget.
Apart from about the revenue from crude oil sales, the Minister said the government expects to realize other revenues from other sources to fund the projected N10.74 trillion Budget, excluding revenues retained from the 63 government owned enterprises.
The revenues include N195.72 billion from dividend payments from both the Nigeria LNG and Bank of Industry, in addition to about N2.915 billion from the share of Minerals and Mining.
Also, about N2.132 trillion, made up of the share of revenue from the share of Company Income Tax (CIT), Value Added Tax (VAT), customs and excise duties from the Nigeria Customs Service (NCS), and Federation Accounts levies.
She said the government expects to realize about N29.367 billion as share of electronic money transfer levy (formerly called stamp duty); N96.94 from share of oil price royalty; N3.31 trillion from government owned enterprises revenues, and about N1.578 trillion expected from government owned enterprises as operating surplus during the year.
Besides, another N2.216 trillion is expect as independent revenues during the year, in addition to N300billion as draw down from special levies account; N280.855 billion from signature bonus/oil license renewals; N26.933 billion from domestic recoveries from assets and fines; N63.377 billion from grants and donor funding from international finance organizations as well as N305.998 billion from Tertiary Education (TETFUND) Tax Fund.
The Minister hailed the significant performance of the Independence revenues in the 2021 Budget, noting that over N1.1trillion was realized between January and November over the pro-rata projection of about N973.4 billion.
She expressed the hope that the figure would continue grow higher as the government completes the analysis of the performance at the end of the fiscal year.
To promote fiscal transparency, accountability and comprehensiveness, she said allocations to TETFUND and the budgets of the 63 GOEs were integrated in the FGN’s 2022 Budget proposal, which is shared in the aggregate of 35 percent of projected oil revenues and 65 percent from non-oil sources.