With an average monthly revenue of N829.97 billion from oil taxes, the Federal Inland Revenue Service (FIRS) has fallen short of the agreed target for the 2024 budget of N9.96 trillion.
According to the approved 2024 budget, FIRS was supposed to have collected N3.32 trillion in oil taxes between January and April of this year; however, the agency has exceeded its goal by N1.69 trillion.
Between January and April 2024, the oil sector generated N1.63 trillion in tax income, according to the FIRS, or 49% of the set objective.
The FIRS has an internal objective of N7.5 trillion for the full year, with a monthly average of N625 billion, which is less than the approved budgetary aim.
This indicates that an internal four-month tax revenue target of N2.5 trillion should be set for the agency. It did, however, only record roughly 65% of its four-month target.
A substantial revenue rise from the oil sector is the agency’s goal for 2024, and this sum represents 22% of the N7.5 trillion it hopes to earn this year.
The total amount raised so far this year is somewhat more than the N1.19 trillion that was raised during the same time frame last year.
The information regarding the amount raised this year is derived from figures that FIRS representatives have provided at the Federal Accounts Allocation Committee (FAAC) monthly meetings.
Numerous issues, including theft, illegal oil bunkering, and pipeline vandalism, have plagued Nigeria’s oil industry. Furthermore, the bulk of Nigeria’s antiquated oil pipeline infrastructure was built about 70 years ago.
The Federal Government barely generated up to 70% of its goal revenue from the oil sector in the last two years due to industry problems.
There was some improvement in 2023, as FIRS received N3.17 trillion from N5.26 trillion the previous year, or around 60% of its expected oil revenue.
In addition to the reduction in government revenue, oil companies that have been having difficulty in the industry have decided to pull out of the market. Among them are Equino of Norway, TotalEnergies, Shell, and ExxonMobil.
According to Patrick Pouyanne, CEO of TotalEnergies, the company decided to invest $6 billion in Angola rather than Nigeria because of the nation’s inconsistent policies and other problems.
Nigeria, a major oil producer, yet finds it difficult to satisfy its OPEC quota due to a variety of issues, including poor investment, oil theft, and inadequate infrastructure in the industry.
For 2024, the Federal Government has set a conservative baseline for oil prices of $77.96 per barrel and a daily production forecast of 1.78 million barrels per day.
While West Texas Intermediate (WTI) oil continued to trade above $80 per barrel, Brent oil futures were trading close to $84 two weeks ago.
Brass River and Qua Iboe in Nigeria traded at $86.53 a barrel last month, surpassing the main oil benchmark.
Additionally, the Organization of Petroleum Exporting Countries and its allies (OPEC+) Joint Ministerial Monitoring Committee (JMMC) set Nigeria’s crude oil production quota for 2024 at 1.5 million barrels per day.
Nigeria did, however, slightly increase its average daily production of crude oil to 1.281 million barrels in April.
The average daily production for the first quarter of the year was 1.327 million barrels.
The nation’s overall budget performance, foreign reserve position, revenue generation, and foreign exchange stabilization are all negatively impacted by its persistent failure to reach its OPEC quota and budget proposal target.
Notwithstanding the difficulties, the present government declared that by the end of the decade, it hoped to boost the nation’s oil production to an ambitious 4 million barrels per day.
