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Nigeria loses $60bn oil revenue in 2012


Nigeria reportedly lost about $60 billion oil revenue due to shortfalls in its estimated production in 2012. Vanguard gathered from an  industry source in one of the leading International oil consulting firms   that the country has since 2008 lost about $100 billion revenue by not producing what is supposed to  produce.

“Even if we are producing three million barrels per day, we can sustain production of oil, the problem is not resources because the oil is there in the ground, but it’s getting that oil out and to get it out, you have to have proper exploitation. Any delay in getting those resources out translates to lost production.”

The source noted that the arrays of failed projects in the country are as a result of budgets made on assumption of risk. “From what we are seeing, the money to cover those budget estimates does not come because we are not earning money. This is the reason hospitals are built and not equipped, schools cannot be upgraded, and universities are where they are. Ghana is producing more than what is in its budget, but we are producing about 20 percent less than what is in our budget.”

Another source that is into advisory services expressed fears over exchange rate rising to as much as N200 per dollar, hence oil price collapsed to $80 per barrel. According to the source, “We are in a vicious circle where if we do not take care, we are going to be in trouble. In 2012, we did 2.1 million barrels; the budget was done on 2.5 million.

What has been helping us is the fiscal rule to pay what is above; we need to reduce government revenue. In 2012, the shortfall was $10 billion, that is the difference between what they budgeted and what  they did, but what was originally budgeted for is about 50 billion in one year, it means that we are borrowing more or we borrow more because the deficits are there.

“The point is that we are going to fiscal economy and most Nigerians do not know. It is possible that by this time next year the naira will be 200 to a dollar. Imagine that the price of oil collapses to $80 per barrel; we will have no choice as we would have blown our reserves. This affects the ability to create jobs. Without investment, there is no job, and once there is no job we are in trouble.”

The source said government is behind the PIB problem. There was a consensus that industry restructuring among others are issues that the government should look into while also stating that without reforming NNPC nothing will change.

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