…As Don says Nigeria, Africa to benefit from rising oil price***
The Nigerian National Petroleum Corporation (NNPC) transferred N153.01 billion into the federation account in January.
The Corporation indicated this in its Financial and Operations Report for the month of January released in Abuja on Sunday.
“Within the period under focus, NNPC transferred N153.01 billion into the Federation Account.
“Cumulatively, from January 2018 to January 2019, Federation and JV received N905.45 billion and N658.66 billion respectively, under the column of Naira Payments to the Federation Accounts,’’ NNPC said in the report.
The corporation also said that it made a trade surplus of N15.04billion for January 2019, an increase of 24 per cent over the N12.13 billion surplus posted by the corporation in December 2019.
It attributed the positive financial position to the improved performance of NNPC’s upstream subsidiary, Nigerian Petroleum Development Company (NPDC) which recorded surplus numbers in spite reduced operational activities in the month.
The report submitted that NPDC’s sustained revenue drive, evident from recent average weekly production of 332,000 barrels of Crude oil per day.
The report noted that this has made achieving 500,000bpd production by 2020 plausible.
According to the report, the NPDC’s position contrasts with the high expenditure levels posted by two other entities of NNPC, the Petroleum Products Marketing Company (PPMC) and Duke Oil, although both ended the month with profit.
In terms of sales and remittance of crude oil and gas proceeds, the corporation recorded a total export receipts of 381.70 million dollars in the month under review as against 345.68 million dollars posted in December 2018.
A breakdown of the numbers indicated that contributions from crude oil amounted to 269.43 million dollars, while gas and miscellaneous receipts stood at 111.75 and 0.52 million dollars.
On petrol supply, 1,998.61 million litres of petrol was supplied into the country through the Direct-Sale-Direct-Purchase (DSDP) crude-for-product arrangement in the month under review..
The number was slightly higher than the 1,789.20million litres of petrol supplied in the month of December 2018.
On pipeline vandalism, the corporation recorded 230 hacked pipeline points, leaving only two ruptured.
This marks 11 per cent improvement from the 264 vandalised points posted in December 2018.
A breakdown indicated that Mosimi-Ibadan, Ibadan-Ilorin and Aba-Enugu pipelines accounted for 67, 62 and 30 points which translated to 29 per cent, 27 per cent and 13 per cent of the vandalised points.
“The Warri-River Niger axis accounted for 10 per cent and other locations accounted for the remaining 21 per cent of the pipeline breaks,’’ the report stated.
On the gas sector, natural gas production increased by 2.22 per cent at 245.83billion cubic feet compared to output in December 2018, translating to an average production of 8,194.34 million standard cubic feet of gas per day (mmscfd).
According to the report, out of the volume supplied in January 2019, a total of 151.50bcf of gas was commercialised, consisting of 38.03BCF and 113.47 BCF for the domestic and export market.
The figure translates to a total supply of 1,226.83 mmscfd of gas to the domestic market and 3,780.24 mmscfd of gas supplied to the export market for the month.
This implies that 61.73 per cent of the average daily gas produced was commercialised, while the balance of 38.27 per cent was re-injected, used as upstream fuel gas or flared.
The report disclosed that gas flare rate was 7.52 per cent for the month under review; translating to 610.07mmscfd compared with average gas flare rate of 9.76 per cent, that is 770.31 mmscfd for the period January 2018 to January 2019.
In the meantime, Prof. Uche Uwaleke of the Department of Banking and Finance, Narsarwa State University has observed that the rising global crude oil price would help Nigeria’s budget deficit and induce development in Africa.
Uwaleke noting this on Sunday in Abuja, stressing that Oil prices inched up on Friday as strong U.S. economic data boosted demand sentiment with Brent crude oil futures settled at $70.85 a barrel, rising 10 cents.
The global benchmark crude shed 2.6 per cent for the week, breaking a five-week winning streak.
Uwaleke said that African countries that export oil could use the period of rise in crude prices to attain reasonable development, if they plan well.
According to him, it is a wonderful opportunity for Nigeria to catch up with its budget implementations.
“Rising crude oil price will go a long way in reducing Nigeria’s budget deficit and by implication minimize our borrowing requirements and the country’s debt burden.
“It is a good development for oil exporting African countries including Nigeria.
“It is an opportunity to save and build fiscal buffers in the event of a slump in projected government revenue,’’ he said
He further noted that the rising crude prices would help to increase remittances to thr Federation Accounts Allocation Committee (FAAC), adding that it would place state governments in a strong position to discharge their responsibilities including implementing the new minimum wage.
“Since economic activities in Nigeria depends so much on crude oil revenue, it is also expected to translate to rising GDP.
“For sure, there will be accretion to external reserves and further stability in exchange rate.
“It is also positive for capital inflows as it engenders increased confidence on the part of foreign investors and international lenders in dealing with Nigeria,’’ he added.
Uwaleke also noted that rising crude oil price usually leads to an increased tempo in stock market activities.
“ But the downside of this development is the negative impact it has on cost of imported petroleum products and the growing oil subsidy,’’ he said.
However, in another development, an expert, Wunmi Iledare, Professor of Energy Economics, said that a sustained high oil price was not good for the global economy.
He said that the development implied high cost of production and low economic growth in oil and consuming nations.
“And for oil producing countries like Nigeria, it can create dislocation in the economy leading to inefficiency, lack of transparency and accountability.
“Without proper accountability, producing oil for cash flow is detrimental to sustainable economic development.
“Most often oil for cash because of high crude prices creates unsustainable cash surplus with governance framework that is based on patronage and sentiments,’’ he added.