Crude oil export revenue by Nigerian National Petroleum Corporation (NNPC) fell sharply by one-half in November 2017 to $113.97 million.
The information, contained in the corporation’s financial report for November 2017, shows that the drop in crude oil revenue accounted exclusively for a drop of 25.7% in total crude oil and gas sales proceeds – which amounted to $239.10 million at the end of the month.
Crude oil export earnings had contributed $227.83 million or nearly 71% to total oil and gas export earnings in October. Its contribution fell to 47.7%) in November.
This represents the lowest crude oil earnings as well as the lowest total oil and gas revenue in seven months.
The drop in crude oil revenue at the significantly increased price in the international market is raising concerns over the health of the economy, as improving oil earnings have been the major driving force of Nigeria’s economic recovery.
Crude oil earnings in November measured well below what the nation earned when crude oil price hovered around $40 a barrel.
Informed views trace the development to a major kink in NNPC’s cost structure sparked by increased cost of importation of refined products.
Crude oil proceeds presently reflect the position net of increased product cost, a somewhat escape route from the vexed question of petroleum subsidy.
The implication is that the slacken performance in oil revenue may be sustained going forward, as long as improving crude oil price keeps the cost of refined petroleum products increasing as well.
Government’s ability to strengthen the fragile economic recovery looks likely to be undermined by Nigeria’s dependence on imported petroleum products.
The impact of the development on government budget is adverse. NNPC’s remittance to the federation account fell all the way from $121.75 million in October to $56.56 million in November. This is the lowest figure since May 2017 and a sustained decline for the third month running.
Total receipts from oil and gas export also dropped by 27.5% in November to $201.11 million, according to the NNPC’s financial report. Again crude oil accounted exclusively for the drop at 35.3% to $147.39 million.
Up to $144.55 million of the total receipts was applied to fund the JV cost recovery for the month to secure current and future productions. In 13 months to November 2017, NNPC has remitted $854.46 million to the federation account.
The administration is constrained on choices available for now. The political atmosphere isn’t conducive for dumping the increased cost of imported petroleum products on consumers.
Neither can government boost of revenue good enough to impress the people on infrastructure development.
In what is considered a desperation expedient move, government has embarked upon an unplanned rehabilitation of the main producing refinery in Port Harcourt to boost supply of locally refined products.