Despite the huge global crash in prices, Nigeria’s earnings from oil and gas in the first half of 2020, is N2.41 trillion just 8.7 per cent below the N2.63 trillion recorded in the corresponding period of 2019.

This brings the country’s total earnings from this mainstay of revenue in the past five years (2015-2019) to N24.1 trillion.

According to the data sourced from the Central Bank of Nigeria, CBN, oil revenue in the first six months of 2020, accounted for 59.7 per cent of gross federally-collected revenue of N4.03 trillion recorded in the same period.

On a month-on-month basis, the report noted that in January, February, March, April, May and June 2020, N527.18 billion, N405.33 billion, N454.34 billion, N284.04 billion and N281.97 billion respectively.

Despite challenging global economic headwinds, Nigeria earned N21.71 trillion from the oil and gas industry in five years, from 2015 to 2019.

During this period, the country’s economy went into recession, occasioned by declining prices of crude oil and low crude oil output, due to militancy in the Niger Delta region, sabotage and vandalisation of oil and gas assets across the country, especially the in oil-producing communities.

This was even as experts maintained that the funds had not been effectively utilized to impact the lives of a vast majority of Nigerians, as well as in growing the economy of the country.

The revenue from the oil and gas sector comprise earnings from crude oil and gas exports, Petroleum Profit Tax, PPT, royalties and domestic crude oil sales.

Oil earnings from 2015 to 2019 represented 60.25 per cent of the combined budget figure for the same period.

The average price of crude oil, which is one of the major drivers of the earnings, for the five-year period, 2015 to 2019, was $55.32 per barrel, but the 2020 average has since dropped to $38.

Giving a breakdown of the country’s oil earnings, the reports revealed that N3.83 trillion, N2.69 trillion, N4.1 trillion, N5.55 trillion and N5.54 trillion were recorded as oil revenue in 2015, 2016, 2017, 2018 and 2019 respectively.

Funds utilisation

Despite the funds accrued to the country within the period from the oil and gas industry, experts are unanimous in their views that the government has not effectively utilized the country’s oil earnings for the purpose of developing the country.

Specifically, Professor Wumi Iledare, a petroleum economist and former President of the Nigerian Association for Energy Economics, NAEE, maintained that the country had not effectively managed its oil earnings, especially when viewed against current economic realities.

Iledare, who is also Ghana National Petroleum Corporation, GNPC, Professorial Chair in Oil and Gas Economics and Management at the Institute for Oil and Gas Studies, University of Cape Coast, Ghana, said: “The answer to whether Nigeria had effectively managed its oil earning is obvious from the deficit of N16 trillion, when compared against the total budgets for the period, 2015 to 2019.

“If you examine the budget items over the period, the proportion earmarked for capital expenditure reflects Esau’s Syndrome mentality. Most budget items were mostly for concurrent expenditures and mostly political governance; living on borrowed money.

“In my opinion, I do not see how spending more money over the period on subsidy than education, healthcare, and infrastructure can be considered effective, efficient, ethical and effective.”

Also speaking, Expert Advisory Panel of the NNRC, Ronke Onadeko, argued that Nigeria had not done well with effective management of oil revenues, noting that the country has not achieved many milestones that are crucial to development as an emerging economy.

She said: “Our priorities have not been well articulated. If we are striving towards an educated healthy population that has a technological future, we need to see government prioritising infrastructure, primary health care, and education among others.

“Development plans have not been adequately funded; this is quite evident in the non-passage of the petroleum industry bill for close to 20 years.

“In addition, the haphazard manner in which the gas master plan and development plans have been rolled out and funded demonstrates this.

“The gas to power plan has not seen milestones achieved and funds for the future have not been set aside such as the frontier, midstream, de-commissioning, host community and sovereign wealth funds among others.

“These critical funds have not been sufficiently funded, or in some cases funded at all. The government needs to show some political will, dedication and sacrifice to these issues or else we will not achieve much in the next five years.”

On his part, Senior Lecturer in the Department of Economics and Development Studies, Covenant University, Ota, Ogun State, Dr. Obindah Gershon, concurred with the others, adding that Nigeria could have better utilized its oil revenue to diversify the economy over the years.

Source: Vanguard