THE Nigerian government has lost over N16 billion in revenue daily from crude oil production amounting to N1.62 trillion between January and May this year as oil production volume dropped rapidly.

This development portends that Nigeria could struggle to meet its annual budget funding which is largely hinged on oil revenue resources, an analysis by The ICIR has shown.

At the start of the year, Nigerian President Bola Tinubu had signed into law an N28.7 trillion budget for the fiscal year, breakdown into N8.76 trillion for recurrent expenditure, N9.99 trillion for capital expenditure, N8.27 trillion for debt servicing and N1.7 trillion for statutory transfers.

The government projected over N15 trillion in revenue, anticipating to fund the budget with over 70 percent revenues from crude oil production.

However, there are worries that the revenue projection is at risk should oil production remain 27.0 per cent below its budgetary provisions.

Analysis by The ICIR shows that crude oil production dropped significantly in the review months, resulting in a daily loss of N16.05 billion and amounting to N1.62 trillion.

In its 2024 budget, the federal government set the crude oil production benchmark, including condensate, at 1.7 million barrels per day (bpd) and based the crude oil benchmark at $77.97 per barrel and exchange rate at N800 to one dollar.

With the 1.7 million bpd and $77.97 benchmark rate, the country will earn $132.55 million or N106.04 revenue daily.

However, according to the Organisation of the Petroleum Exporting Countries (OPEC) monthly statistics, Nigeria’s crude oil production fell sharply between January and May 2024.

The data shows that the country’s crude oil production volume dropped consecutively from  1.43 million bpd crude in January to 1.32 million bpd in February to 1.23 million bpd in March to 1.28 million bpd in April and to 1.25 million bpd in May.

This averaged 1.3 million bpd production in the review months and fell short of the 1.7 million bpd benchmarked in the 2024 budget.

Additional information from the Central Bank of Nigeria (CBN) website shows that crude oil production prices averaged $86.53 and crude oil traded for 101 days in the five months under review.

With an average daily crude oil production of 1.3 million bpd at $86.53 price, Nigeria earned   $112.49 million or N89.99 billion‬ in revenue as against the $132.55 million or N106.04 budget benchmark, resulting in a loss of $20.06 million or N16.05 billion daily.

This indicates that Nigeria lost $20.06 million or N16.05 billion daily revenue loss in 101 days, amounting to $2.03 billion or N1.62 trillion between January and May this year.

While it could be considered that Nigeria is taking consolation in crude oil prices increasing above the $77.97 per barrel budgeted benchmark, however, the declining crude oil production means reduced earnings from oil sales as the country seeks to boost its revenue base.

Early this month, OPEC and its allies (OPEC+) at its Joint Ministerial Monitoring Committee (JMCC) meeting pegged Nigeria’s crude oil production quota at 1.5 million barrels for 2025 despite the country targeting a two million bpd crude oil production.

In a report, ‘Accelerated Stabilisation and Advancement Plan (ASAP)’ presented to President Tinubu, the minister of finance and coordinating minister of the economy, Wale Edun, expressed worries over Nigeria’s dwindling crude oil revenue.

He said, “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 (year-to-date) variance suggests a lower-than-budgeted revenue of N15.7 trillion at the current run rate.”

A development economist, Kalu Aja told The ICIR that Nigeria needs to guard its oil revenue with extra commitment since it is the major source of its foreign exchange earnings and buffer for the foreign reserve.

“The oil resources must be protected at all costs.  It is still our major revenue-earning source. We are having foreign exchange problems and mainly because we don’t have enough supply for the dollar  for the currency market,”Kalu said.