The Nigerian federal government has said its ability to achieve the 2024 budgeted revenue step-up of 77.4 per cent from 2023 is at risk should oil production remain 27.0 per cent below budgetary provisions.
This was indicated in a draft copy report of the Accelerated Stabilisation and Advancement Plan (ASAP) presented to President Bola Tinubu by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Wednesday.
“Our ability to achieve the 2024 Budgeted revenue step-up of 77.4 per cent from 2023 actual is at risk should oil production remain 27.0 per cent below budget. Fifty per cent of the annualised YTD variance suggests a lower-than-budgeted revenue of N15.7 trillion at the current run rate,” it said.
The report said the federal government retained revenue for January and February 2024 was approximately 60.0 per cent of budget, largely driven by lower crude oil production volumes (at 74.5 per cent of budget projection).
“If current revenue shortfalls persist, the revenue for 2024 is unlikely to exceed N15.8 trillion,” it said.
It added that the current oil production is at 1.4 million bpd compared to the 1.78 million barrels per day (bpd) budget assumption and the Organisation of Petroleum Exporting Countries (OPEC) quota of 1.5 million bpd, resulting in federal government revenue shortfalls.
Overall, it explained that the oil sector, as the fiscal anchor for the Nigerian economy, has underperformed due to years of underinvestment, inefficiency and opacity, leading to lost revenues and jobs and a grossly underserved local energy market.
According to the report, Nigeria’s comparatively high cost of oil and gas operations (mainly due to oil theft, vandalism and unattractive fiscal policies) has negatively impacted investment levels.
It noted that an uncompetitive investment climate resulting in low growth of oil production caused depressed fiscal income to the federation account, illiquidity in foreign exchange markets and domestic energy insufficiency.
“Continued reliance on fuel imports despite significant amounts spent on government-owned refineries over the years constituting significant foreign exchange drain on the economy and difficulties in reducing fuel subsidies to zero given the current inflationary and consequent social pressures,” it said.
