Nigeria's earnings from crude oil to drop in 2024

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Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has declared that the nation’s earnings from crude oil would nosedive in the 2024 fiscal year.

The Governor of the apex bank released this on Thursday at a session between him and the Senate and House of Representatives Joint Committee on Banking, Insurance and other Financial Institutions .

Cardoso premises his submission on the crude oil production limit, theft of the nation hydrocarbon, vandalisation and divestment from the upstream oil sector by the International Oil Companies (IOCs).

He said: “We expect less revenue from oil exports due to the production limit of 1.78mbpd in 2024. OPEC approved quota for Nigeria is 1.8mbpd, which is higher than the 2024 budget assumption.

“However, the country ‘s production has been below these thresholds. The budget benchmark for 2023 was 1.69mbpd, but the highest level of production during the year, was about 1.35mbpd in Q3 of 2023.

“The reasons for the underperformance of the oil production target include crude oil theft and pipeline vandalization, production shut – ins and divestments by major oil companies.”

Reasons cited by IOCs leaving Nigeria include; insecurity, oil theft and entrenched hostilities in host communities.

While Exxon-Mobil is offering its entire share capital in its Nigeria subsidiary to DOC Seplat Energy, Shell last year, dropped the hint that it had received offers for its entire onshore and gas portfolio.

The Governor of CBN however said Nigerians should expect relief from soaring inflation and exchange rates as he claimed that both would experience decline next year.

Cardoso maintained that inflation and Exchange rates would withstand fluctuating pressures on them and get stabilized.

“The outlook for the domestic economy remains positive and expected to maintain the positive trajectory for 2024 .

“Inflation pressures may persist in the short-term but is expected to decline in 2024. Exchange rate pressures are also expected to reduce significantly with the smooth functioning of foreign exchange market.”

He specifically informed the lawmakers that the unification of the exchange rate windows in June 2023, has ushered in a new approach to the management of the exchange rate, aimed at reducing arbitrage, rent seeking behaviour and speculation in the market.

“The policy aims at creating a market where the demand and supply of foreign exchange determines the exchange rate .

“The premium has narrowed and our focus on increasing the autonomous FX supply , would lead to more stability and further narrowing of the premium .

“Total Trade in the third quarter of 2023, stood at N18.804.68billion. Exports were valued at N10.346.60billion while total imports stood at N8.457.68billion. This represents positive trade balance, which would lead to increase of the external reserves.”

Senator representing Lagos East and Chairman of the joint committee, Senator Tokunbo Abiru, said the interactive session was organized for statutory briefing by CBN in line with extant laws.

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