In its latest economic report, the apex bank disclosed that oil revenue plunged by 24.72% to N1.30 trillion compared to the N1.73 trillion recorded in the second quarter.
The Central Bank of Nigeria (CBN) has identified ageing pipeline infrastructure and operational inefficiencies as key factors behind the sharp decline in oil revenue during the third quarter of 2024.
In its latest economic report, the apex bank disclosed that oil revenue plunged by 24.72% to N1.30 trillion compared to the N1.73 trillion recorded in the second quarter.
This figure also fell significantly short of the quarterly target by 75.39%, largely due to frequent shutdowns caused by deteriorating pipelines and installations.
“Oil revenue fell by 24.72% to N1.30tn, relative to the level in Q2 2024, on account of lower receipts from petroleum profit tax and royalties,” the report stated.
“It was also 75.39% short of the quarterly target due to shut-ins, arising from ageing oil pipelines and installations.”
The report further noted that despite a modest rise in crude oil production to 1.33 million barrels per day (mbpd) from 1.27 mbpd in the previous quarter, theft, vandalism, and infrastructure deficits continued to stifle revenue growth.
The ageing infrastructure not only hindered production efficiency but also impaired Nigeria’s ability to meet its OPEC production quota.
Adding to domestic challenges, global market conditions exacerbated the situation.
The average spot price of Nigeria’s Bonny Light crude fell by 5.45% to $82.23 per barrel during the quarter, reflecting weaker global demand.
Similar price drops were reported for other crude benchmarks, including Brent and the OPEC Reference Basket.
Despite the setbacks in the oil sector, Nigeria’s economy grew by 3.46% in Q3 2024, up from 3.19% in the preceding quarter.
This growth was driven primarily by the non-oil sector, which contributed 3.18 percentage points to the total GDP growth.
However, the oil sector’s performance remained sluggish, with year-on-year growth slowing to 5.17%, a significant drop from 10.15% in Q2 2024.
The decline in crude oil prices and persistent operational inefficiencies were cited as major contributors.
The fiscal implications of the oil revenue slump were severe. Federally collected revenue fell 23.71% short of budget projections, even as it rose 7.48% quarter-on-quarter.
Meanwhile, the fiscal deficit narrowed by 22.51% compared to the previous quarter but remained 43.88% wider than the quarterly target, underscoring ongoing fiscal pressures.
The report concluded on a cautionary note, warning that Nigeria’s goal of achieving an oil production target of 2 million barrels per day by the end of 2024 remains under threat unless urgent measures are taken to address infrastructure and operational challenges.
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