2019 budget in trouble as Nigeria misses 2.3m oil production target
THE N8.92 trillion 2019 Appropriation Bill passed by the National Assembly may already be in trouble of faithful implementation as a fundamental source of its implementation has become apparently unrealisable.
Almost five months into the year, the country has been unable to meet its 2.3 million barrels per day crude production target meant to substantially fund the budget.
President Muhammadu Buhari last year presented a proposal of N8.83 trillion to a joint session of the assemblymen but when the Bill was returned to Buhari for his assent on Friday last week, the figure had been jerked up to N8.92 trillion.
According to details of the funding plans for the budget, N710 billion would be sourced from sales of national oil assets; N799.52 billion from companies’ income tax; N299.34 billion from value-added tax; N302.5 billion from customs and excise sources; N209.92 billion from donor funds and grants; and N624 billion from independent revenue.
The bulk of the revenue of N3.73 trillion is, however, from oil revenue production of 2.3 million barrels per day at $60 per barrel.
But since the beginning of the year, Nigeria has not been able to meet the production target.
Although Organisation of Petroleum Exporting Countries (OPEC) agreed to cut oil production as a way of shoring up prices, which plummeted again towards the end of 2018, Nigeria’s inability to meet its target was due mainly to her inability to curb sabotage in the Niger Delta, ageing infrastructure and oil theft.
For instance, the country’s crude oil production for January stood at an average of 1.87 barrels per day in defiance of OPEC’s 1.69 million barrels per day quota.
In February, oil production increased by 1.88 million barrels per day and rose to 1.92 million barrels per day in March.
However, production of the country boosted its production to 1.95 million per day in April, the highest in 14 months.
Nigeria owns 60 per cent equity of its oil production while its joint venture partners own the remaining 40 per cent.
Officials of Nigerian National Petroleum Corporation (NNPC) also argues that some of its crude production should be categorised as condensates, which is not subject to oil production limits of OPEC.
Although the 2019 Appropriation Bill was passed by the National Assembly on April 20, its fine copy was only passed to President Muhammadu Buhari on Friday, May 10 but presidency sources disclosed that the President was not in a hurry to sign it into law as he was still studying it.