Why we cut crude oil production by about 300,000 barrels per day—Agba

Agba Clem, Minister of State for Budget and National Planning, has disclosed that Nigeria government has cut its crude oil production by about 300,000 barrels daily.

This, according to a statement by Ojeifo Sufuyan , Special Assistant on Media to Clem Agba, is  to keep agreement reached by members of the Organisation of Petroleum Exporting Countries and its allies.

According to Agba, the decision to cut crude oil production by OPEC and its allies, a group that is popularly referred to as OPEC+, was in order to stabilise the global oil market.

The minister said, “Crude oil prices declined sharply in the world market, with Bonny Light crude oil price dropping from a peak of $72.2 per barrel on January 7, 2020 to below $20 per barrel in April 2020.

“In effect, the $57 crude oil price benchmark on which the 2020 budget was based became unsustainable.

“Another key development in the international crude oil market is the massive output cut by OPEC and its allies (OPEC+) to stabilise the world oil market, with Nigeria contributing about 300,000 barrels per day of production cuts.”

Agba added, “The impact of these developments is about 65 per cent decline in projected net 2020 government revenues from the oil and gas sector, with adverse consequences for foreign exchange inflows into the economy.”

It was gathered that the minister’s submissions were presented to the House of Representatives Committee on Finance at an interactive session on the 2021-2023 Medium-Term Expenditure Framework and Fiscal Strategy Paper.

On the country’s revenue performance from January to June 2020, the minister stated that as of the end of June 2020, the Federal Government’s retained revenue was N1.81tn, 68 per cent of prorate target.

He said that the Federal Government’s share of oil revenues was N859.1bn, representing 169.48 per cent performance over and above the prorated sum in the revised 2020 budget.

Clem Agba further submitted that non-oil tax revenues totaled N581.23bn, representing 72 per cent of revised target.

He said, “Companies Income Tax and Value Added Tax collections were N301.06bn and N85.4bn, representing 73 per cent and 60 per cent respectively of the pro rata revised targets for the period.

“Customs collections was N184.36bn (82 per cent of revised target), while other revenues amounted to N372.04bn, a lowly 28 per cent of target.”

He said the NLNG dividends, recoveries and stamp duty collected during the period had, however, yet to be booked in the fiscal accounts.

 Meanwhile, the Federal Government spent a total of N1.57tn on debt servicing in the first six months of the year, has said.

Agba said this in a presentation that was made available to our correspondent in Abuja on Sunday by his He said of on government’s expenditure performance, N9.97tn was appropriated, while N4.45tn, representing 89.3 per cent of the pro rata N4.99tn was expended.

The minister stated that out of the expenditure, N1.57tn was for debt service, and N1.61tn for personnel cost, including pensions.

He disclosed that as of end of June 2020, only N444.75bn had been released for capital expenditure, largely due to the budget revision exercise.

Agba, however, stressed that this has increased to about N1bn by July 2020.