The Central Bank of Nigeria (CBN) has ascribed the notable drop in oil revenue for the third quarter of 2024 to operational inefficiencies and ageing pipeline infrastructure.
Oil revenue decreased by 24.72% to N1.30 trillion in the third quarter of 2024 compared to the second quarter, according to the apex bank’s most recent economic report.
Lower revenue from royalties and petroleum profit tax was a major factor in this decline.
Due mostly to frequent shutdowns brought on by deteriorating pipelines and installations, the revenue figure also missed the quarterly target by 75.39 per cent.
The report read, “Oil revenue, however, fell by 24.72 per cent to N1.30tn, relative to the level in Q2 2024 on account of lower receipts from petroleum profit tax and royalties.
“It was also 75.39 per cent short of the quarterly target due to shut-ins, arising from ageing oil pipelines and installations.”
Despite a slight increase in crude oil production to 1.33 million barrels per day from 1.27 Mbps in the previous quarter, it was also pointed out that Nigeria’s oil revenue performance was significantly hindered by issues like theft, vandalism, and inadequate infrastructure.
In addition to decreasing efficiency, the ageing infrastructure made it more difficult for the nation to fulfil its OPEC production quota.
Global factors further exacerbated the situation, according to the report, as the average spot price of Nigeria’s Bonny Light crude fell 5.45% to $82.23 per barrel during the quarter, reflecting muted demand in the global market.
While the oil sector struggled, the Nigerian economy grew 3.46 per cent in Q3 2024, up from 3.19 per cent in the second quarter, primarily due to the non-oil sector, which contributed 3.18 percentage points to the growth of the country’s GDP.
The oil sector’s growth slowed to 5.17 per cent year-on-year, compared to 10.15 per cent in the previous quarter, as operational inefficiencies and falling crude oil prices took a toll.
Federally collected revenue fell 23.71 per cent short of the budget benchmark, despite a 7.48 per cent quarter-over-quarter increase.
The fiscal deficit narrowed by 22.51 per cent from the previous quarter, but it widened by 43.88 per cent from the quarterly target, indicating ongoing fiscal pressures.
The report concluded that these challenges continue to threaten Nigeria’s goal of reaching an oil production target of 2 million barrels per day by the end of 2024.
