Nigeria’s Federal Government has set an ambitious target of N7.69 trillion as oil revenue to contribute to its proposed N27.5 trillion budget for 2024, according to the Breakdown & Highlights of the executive budget proposal presented by Minister of Budget and Economic Planning, Abubakar Atiku Bagudu.
This projected oil revenue is more than triple the amount budgeted for 2023, signaling a bold move to boost finances from a sector grappling with challenges such as oil theft and infrastructural deficits.
In 2023, the government had allocated around N2.23 trillion for oil revenue, highlighting the significant increase proposed for the coming year.
Oil revenue is anticipated to constitute 41.98% of the total expected revenue in 2024, pegged at N18.32 trillion.
However, concerns arise as the Federal Government foresees a decline in oil revenue for 2025 (N6.83 trillion) and 2026 (N7.08 trillion), despite a slight improvement compared to 2024.
Nigeria’s oil sector has faced persistent challenges, including oil theft and infrastructural deficits, contributing to declining revenue over the years.
The government’s struggle to meet oil revenue targets is evident from recent years, with only 35.4% of the planned oil revenue generated in 2022 and about 79.3% in 2023 (January to September).
The challenges in the sector led to the formation of a Special Ad Hoc Committee on oil theft by the Speaker of Nigeria’s House of Representatives, Hon. Tajudeen Abbas, to investigate pipeline vandalism, illegal oil bunkering, and theft.
Despite a slight improvement in the oil sector’s growth rate in Q3/2023, it remains a sector in need of significant attention. The Federal Government has set a conservative oil price benchmark of $77.96 per barrel and a daily production estimate of 1.78mb/d for 2024.
However, experts believe that the proposed revenue may face challenges due to OPEC’s commitment to production cuts, potentially impacting Nigeria’s ambitious targets.
Clementine Wallop, senior adviser to political risk consultancy Horizon Engage, highlighted the struggles in Nigeria’s oil sector, emphasizing that there is still much work to be done.
Source: Nairametrics