The federal government’s target revenue for 2024 is projected to decline by N3.89 trillion due to crude oil production not meeting the set target in the 2024 budget.
The draft Accelerated Stabilization and Advancement Plan (ASAP) reveals that failure to meet the target crude oil production of 1.78 million bpd could result in a revenue shortfall of N3.89 trillion.
In 2024, the federal government projects to raise revenue to N19.68 trillion from diverse sources. However, the sub-optimal crude oil production could reduce the projected earnings to around N15.78 trillion creating the projected shortfall.
The document further explained that there is an average 27% shortfall in crude oil production from the target set in the 2024 budget and this puts the estimated revenue for the year at risk.
In 2024, the federal government hopes to generate N6.23 trillion in oil revenue using the adjusted calculation from January and February data.
It stated, “revenue for January & February 2024 was approximately 60.0% of budget, largely driven by lower crude oil production volumes (running at 74.5% of budget projection). If current revenue shortfalls persist, the revenue for 2024 is unlikely to exceed ₦15.8 trillion”
“Our ability to achieve the 2024 Budgeted revenue step-up of 77.4% from 2023 actual is at risk should oil production remain at 27.0% below budget. 50% of the annualized YTD variance suggests a lower-than-budgeted revenue of ~₦15.7 trn at the current run rate.”
What you should know
The federal government in the 2024 budget set a revenue target of about N19.6 trillion and a deficit of N9.18 trillion. The average daily crude oil production projected for the year stood at 1.78 million barrels.
- However, the country has failed to meet the target in the first four months of the year. Nigeria’s plans to produce 1.78 million barrels of crude oil was first punctured by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) when in December set a production quota of 1.5 million barrels daily- 288 thousand below the budget target.
- In January, OPEC figures revealed that average crude oil production for the month stood at 42 million bpd– below both the OPEC quota and the budget target. This figure dropped to 1.32 million bpd in February and dropped further to 1.23 million barrels daily according to direct communication figures from OPEC.
- In the first quarter of the year, the country like in 2023 failed to meet the OPEC+ production quota and also meet the 2024 budget production target with average production barely reaching 1.4 million bpd.
What the federal government is doing
The President and the Minister of Petroleum resources have set a target of producing 2 million barrels of oil daily by the end of the year. Furthermore, the President also has an ambitious plan to produce 4 million barrels of oil daily in three years’ time.
- In March, President Tinubu signed a raft of Executive orders meant to attract investment into the oil and gas industry to boost production. Furthermore, the President has mandated security agencies to bring an end to the spate of oil theft in the Niger Delta region.
- Also, the President has mandated the relevant agencies to fast track the approval of divestment plans by oil majors which has stalled investment in exploration and new production fields.
