Crude oil sales to fetch Nigeria $ 37.7 bn in 2005

Nigeria’s crude oil earnings is expected to grow by 27 % this year, grossing $ 37.7 bn (about N 5.05 tn), and then rising by another 9 % to $ 41.1 bn (about N 5.507 tn) in 2006, largely due to rising prices of crude oil in the international market.
The projected rise in crude oil export receipts for year 2005 amounts to $ 10.179 bn (about N 1.363 tn) in excess of crude oil receipts for year 2004. Crude oil and gas accounts for between 90-95 % of Nigeria’s foreign exchange earnings and over 80 % of government revenues.

OPEC gave this indication in a recent report, noting that the Nigeria’s real Gross Domestic Product (GDP) which is estimated to have grown by 5.5 % in 2004, is forecast to take a dip in 2005 with a growth of 5.2 %, and another dip in 2006 with a growth of 4.8 %. The report forecast that Nigeria is expected to export around 2.2 mm bpd of crude oil in 2005. But exports have averaged 2.4 mm bpd.
The cartel had forecast daily exports of some 2.2 mm bpd for Nigeria in 2004, noting that this is projected to increase to 2.5 mm bpd in 2006.

Nigeria’s 2004 budget was based on an assumption of $ 25 per barrel (for Nigerian oil), about $ 12 per barrel below Nigeria’s actual oil price for that year. As a result, Nigeria experienced a windfall in 2004, resulting in a debate over what to do with the extra money.
It would be recalled that in September 2004, the government decided to distribute half of the excess oil revenues to the country’s stabilization fund, with the rest going to federal, state, and local governments. In November, the government further decided to use about $ 280 mm from the stabilization fund to help offset higher fuel costs for Nigerian citizens, while anchoring the year 2005 budget on a projected oil price of $ 30 per barrel.

Despite its huge oil wealth, most of Nigeria’s population of over 137 mm live under extremely poor conditions, with failed government promises of deploying measures to improve conditions. The World Bank says that around 80 % of the country’ oil and natural gas revenues accrue to just 1 % of the population, while the other 99 % receive the remaining 20 % of the revenues.
Overall, Nigeria’s per capita oil export earnings are the second lowest in OPEC, next to Indonesia, at around $ 268 per person. This compares to $ 736 per person earned in 1980, the peak year for Nigerian oil export revenues (in constant $ 2004).

An independent survey however shows that despite increases in Nigeria’s receipts from oil windfall, the generality of the masses continue to live under extremely harsh conditions. Despite increases in crude oil and gas earnings, and supposed government efforts to buoy the economy and improve upon infrastructure, there is galloping inflation, rising crime wave, increased agitation for better conditions of living and a total disconnect between government and the governed.
The available government owned hospitals remain in a terribly dilapidated state, most states and federal roads remain a nightmare to traverse and the cost of doing business remains unacceptably high due to large scale corruption.

Political turmoil over the past six years, including a flare up in March 2003 which resulted in force majeure declarations by ChevronTexaco and Shell, both major oil producers in the country, has had a serious effect on the country’s economic and fiscal situations. The country’s oil revenues are further reduced by theft and illegal "bunkering" of oil by supposed criminal syndicates, possibly by several billion dollars per year.
In December 2004, Dr Ngozi Okonjo-Iweala, the Finance Minister announced that the Nigerian National Petroleum Corporation’s budget would be integrated into the federal budget starting in 2006, partly as a way to increase transparency.