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Akabueze: Why Nigeria has not met OPEC quota

The Director General, Budget Office of the Federation, Ben Akabueze, has attributed Nigeria’s inability to meet the Organisation of Petroleum Exporting Countries (OPEC’s) quota to industrialscale crude oil theft and the rampant vandalism of crude oil facilities.

 

Commenting on fuel subsidy, which remains a drain on the economy, he also projected that Nigeria would spend more than the N4 trillion proposed for subsidy on premium motor spirit, popularly called petrol. He alleged that the Federal Government had never been very honest about the cost of fuel subsidy in the country.

 

He said: “On one hand, we do not even know what we consume, which is a big embarrassment. I listened to the National Assembly saying NNPC is the sole importer of petrol and they said they imported about 63 million litres per day. How can the consumption be more than what we are importing.”

 

He spoke at the Lagos Chamber of Commerce and Industry (LCCI) economic and business outlook seminar 2022 tagged: “LCCI Mid-year Economic Review and Outlook conference,” in Lagos. Akabueze also said the joint ventures were being negatively affected the most because of the rising crude oil theft and rampant destruction of oil production facilities in Nigeria.

 

According to him, the JVs have the highest stake in oil and gas contracts, adding that the implications for the federal government’s revenue were vastly in different ways with the stake much lower on production sharing contracts. He said: “There are different business arrangements in the oil and gas sector  which have different implications for government’s revenue.

 

The JVs are the biggest hit as a result of crude oil theft and destruction of oil facilities since they provide the highest stake. “If you are doing 500 million barrels per day, production sharing contracts, the implication for government revenue is vast in a different way, the sake his much lower on production sharing contracts.”

 

The President, LCCI, Michael Olawale- Cole, said that the Central Bank of Nigeria (CBN)’s rate hike and rising energy cost, with diesel above N800/litre, Jet-A1 at N710 per litre and petrol selling above the government-regulated price of N165 per litre, would continue to increase production costs, which could result to restrained manufacturing and eventual job losses. He stated that in the third quarter, many factors would limit economic growth.

 

He identified them as CBN’s rate hikes and rate hikes by other central banks around the world. He also raised the alarm that the worsening security situation in many parts of the country would continue to threaten agricultural production, manufacturing value chains and logistics.

 

Olawale-Cole said: “We expect to experience some fiscal constraints because of debt overhang accompanied by a high debt service burden and heavy subsidy costs.

 

There are therefore heightened fears of contracting output, constrained production, and recession risks as we navigate the murky waters of 2022. “The Chamber had, earlier in the year, projected a growth rate of 2.5 per cent for the economy.

 

The projection was anchored on the assumption of sustained high oil prices, transition to a market-reflective exchange rate system, targeted fiscal interventions, and gradual implementation of reforms in the oil sector.”

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