The 2016 national budget just signed into law by President Muhammadu Buhari may have started suffering a major cash flow set back from oil revenue as prices shed $5 per barrel as at last weekend while output dropped further due to Chevron facility bombing just before the budget was signed, Friday.
The Federal Government had based the budgeted revenue on oil production of 2.2 million barrel per day but oil industry reports, last weekend, after the second attack on oil installations, indicated that output would be around 1.6 mbpd or even less.
Also, the budgeted oil price benchmark of $38 per barrel came with expectation that in the event of production shortfall, which had been consistent since this year, a premium of at least 20 per cent on the price benchmark which gives about $45.6 per barrel, would make up for the losses arising from output shortfalls. But oil price receded to $41 per barrel, or less than 10 per cent premium on budgeted price benchmark as against $46.1 per barrel peak recorded in the previous week. With the twin developments in the oil sector, the Federal Government is now losing about $8 million per day on oil price reversal, while production slump has resulted in a revenue loss to the tune of about $22.8 million per day. The total loss from date to year end on annualized budgetary provisions would be $7.16 billion or about N1.4 trillion, if the oil price fails to rebound sometime down the year and production level remains depressed. Losses wipe out 80% of budgeted CAPEX The N1.4 trillion revenue shortfall would wipe out about 80 per cent of the total N1.8 trillion earmarked for capital expenditure, CAPEX, in the budget, thereby rendering the reflationary thrust of the budget ineffective from the on-set.
On the possibility of oil price upwards swing, the International Monetary Fund, IMF, last week said the average price for the year would be $41, with occasional downward and upward swings, meaning that the losses to price reversal would likely remain.
Also on the future of production level recovery, various factors that have combined to depress output to less than the budgeted 2.2 million barrel per day, such as joint venture hitches as well as militancy, appear to be on the increase rather than being eliminated.
Latest data from April Monthly Oil Market Report, MOMR, of the Organisation of Petroleum Exporting Countries, OPEC, showed that Nigeria’s crude oil production fell by 67,000 bpd in March from 1.744mbpd to 1.677mbpd, with Nigerian industry experts saying that April did not do better, while last week’s attack on Chevron brought down output to about 1.637mbpd.
With the defiant posturing of the militants and threats of further attacks, it appears the output challenges may even get worse, especially as the Nigerian security agencies appeared too weak to arrest the situation.
Already, reports indicate that other major oil producers such as Shell and Mobil may have started plans to shut-in production locations in volatile areas, following the threats.
Apparently aware of the implications of these sudden developments last weekend while signing the budget, President Buhari said: “We are working night and day to diversify the economy so that we never again have to rely on one commodity to survive as a country
But oil price receded to $41 per barrel, or less than 10 per cent premium on budgeted price benchmark as against $46.1 per barrel peak recorded in the previous week. With the twin developments in the oil sector, the Federal Government is now losing about $8 million per day on oil price reversal, while production slump has resulted in a revenue loss to the tune of about $22.8 million per day. The total loss from date to year end on annualized budgetary provisions would be $7.16 billion or about N1.4 trillion, if the oil price fails to rebound sometime down the year and production level remains depressed. Losses wipe out 80% of budgeted CAPEX The N1.4 trillion revenue shortfall would wipe out about 80 per cent of the total N1.8 trillion earmarked for capital expenditure, CAPEX, in the budget, thereby rendering the reflationary thrust of the budget ineffective from the on-set. On the possibility of oil price upwards swing, the International Monetary Fund, IMF, last week said the average price for the year would be $41, with occasional downward and upward swings, meaning that the losses to price reversal would likely remain. Also on the future of production level recovery, various factors that have combined to depress output to less than the budgeted 2.2 million barrel per day, such as joint venture hitches as well as militancy, appear to be on the increase rather than being eliminated. Latest data from April Monthly Oil Market Report, MOMR, of the Organisation of Petroleum Exporting Countries, OPEC, showed that Nigeria’s crude oil production fell by 67,000 bpd in March from 1.744mbpd to 1.677mbpd, with Nigerian industry experts saying that April did not do better, while last week’s attack on Chevron brought down output to about 1.637mbpd. With the defiant posturing of the militants and threats of further attacks, it appears the output challenges may even get worse, especially as the Nigerian security agencies appeared too weak to arrest the situation. Already, reports indicate that other major oil producers such as Shell and Mobil may have started plans to shut-in production locations in volatile areas, following the threats. Apparently aware of the implications of these sudden developments last weekend while signing the budget, President Buhari said: “We are working night and day to diversify the economy so that we never again have to rely on one commodity to survive as a country.” 60 0 1 0 YOU MAY LIKE Fayose hails US govt, UK Telegraph reports on Buhari's witch-hunt of opposition - Vanguard … Why anti-corruption war is selective — Ayo Obe - Vanguard News Tribunal stands-down Saraki’s trial - Vanguard News Monarch at war with Oshiomhole, ex-Dep Gov over Obaseki’s guber ambition - Vanguard N… Five-year jail term for lecturers who sexually molest students if... - Vanguard News Cultists kiil native doctor in own shrine - Vanguard News Americans Shocked as Iraqi Wins US LotterytheLotter.com Find Out How Traders Earn Real Cash OnlineBforex Online Trading The Brilliant Biologist Uncovering The Origin Of LifeBill Gates Only In Australia! - These 17 Things Will Shock You TravelTips4Life 31 Haunting Images of Abandoned PlacesLifestyle & Design Mag 15 Most Beautiful Women In The WorldCrazy Freelancer by Taboola Sponsored Links johnabayomi2 View all posts by johnabayomi2 → Previous Post Late Ronke Shonde with her alleged killer husband during their 'sweet' days Murder of banker: Late wife feared hubby would kill her —Source You might also like Liberian president appoints son head of central bank Liberian president appoints son head of central bank How Ekiti under-aged girls are turning into comfort women How Ekiti under-aged girls are turning into comfort women Herbalist with 48 wives, 200 children in trouble Herbalist with 48 wives, 200 children in trouble Why strike must go on tomorrow, by NLC Why strike must go on tomorrow, by NLC The most dangerous day in a woman's life The most dangerous day in a woman's life Messi floors Ronaldo again Messi floors Ronaldo again Why I don’t wear pants Why I don’t wear pants Jonathan's ex Jonathan's ex Recommended by Disclaimer Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof. 6 comments Livefyre Sign in 322 people listening oluruntobi austine KunleAdeFidelisEvaace102keys22AmadiItiri1 Newest | Oldest ummuzee ummuzee @ummuzeefrom Twitter 33m @Jaynumedia @vanguardngrnews, sometimes you wonder how journalists become experts in other fields, and jump into conclusions all d time . Reply on TwitterRetweetLikeFlagShare LikeReply AmadiItiri1 AmadiItiri1 53 minutes ago It shall be well FlagShare LikeReply keys22 keys22 59 minutes ago Just a few attacks in delta and u are already lost. Mr President leave our oil alone, and find oda means to sustain Nigeria... U can't b using our resources to enrich d north... We no go gree oooo, we no go gree. FlagShare LikeReply ace102 ace102 1 hour ago Like Nigerian soil cannot grow those grass!!! Awful people. Herdsmen from Enugu, Ondo will have to walk back to Kano so they can access Buhari's imported grass. We are talking of reducing Naira's exposure to dollar, they are talking of importing grass!!! Is imported pen, toothpick not better than common grass? What a nation! FlagShare LikeReply Lawrence Onyemaechi Lawrence Onyemaechi 1 hour ago APC as a political party has no clear plan and vision on how to move the country forward. Let them show us their road map FlagShare LikeReply
Read more at: http://www.vanguardngr.com/2016/05/2016-budget-faces-cash-flow-emergencies-may-lose-n1-4trn/
But oil price receded to $41 per barrel, or less than 10 per cent premium on budgeted price benchmark as against $46.1 per barrel peak recorded in the previous week. With the twin developments in the oil sector, the Federal Government is now losing about $8 million per day on oil price reversal, while production slump has resulted in a revenue loss to the tune of about $22.8 million per day. The total loss from date to year end on annualized budgetary provisions would be $7.16 billion or about N1.4 trillion, if the oil price fails to rebound sometime down the year and production level remains depressed. Losses wipe out 80% of budgeted CAPEX The N1.4 trillion revenue shortfall would wipe out about 80 per cent of the total N1.8 trillion earmarked for capital expenditure, CAPEX, in the budget, thereby rendering the reflationary thrust of the budget ineffective from the on-set. On the possibility of oil price upwards swing, the International Monetary Fund, IMF, last week said the average price for the year would be $41, with occasional downward and upward swings, meaning that the losses to price reversal would likely remain. Also on the future of production level recovery, various factors that have combined to depress output to less than the budgeted 2.2 million barrel per day, such as joint venture hitches as well as militancy, appear to be on the increase rather than being eliminated. Latest data from April Monthly Oil Market Report, MOMR, of the Organisation of Petroleum Exporting Countries, OPEC, showed that Nigeria’s crude oil production fell by 67,000 bpd in March from 1.744mbpd to 1.677mbpd, with Nigerian industry experts saying that April did not do better, while last week’s attack on Chevron brought down output to about 1.637mbpd. With the defiant posturing of the militants and threats of further attacks, it appears the output challenges may even get worse, especially as the Nigerian security agencies appeared too weak to arrest the situation. Already, reports indicate that other major oil producers such as Shell and Mobil may have started plans to shut-in production locations in volatile areas, following the threats. Apparently aware of the implications of these sudden developments last weekend while signing the budget, President Buhari said: “We are working night and day to diversify the economy so that we never again have to rely on one commodity to survive as a country.” 60 0 1 0 YOU MAY LIKE Fayose hails US govt, UK Telegraph reports on Buhari's witch-hunt of opposition - Vanguard … Why anti-corruption war is selective — Ayo Obe - Vanguard News Tribunal stands-down Saraki’s trial - Vanguard News Monarch at war with Oshiomhole, ex-Dep Gov over Obaseki’s guber ambition - Vanguard N… Five-year jail term for lecturers who sexually molest students if... - Vanguard News Cultists kiil native doctor in own shrine - Vanguard News Americans Shocked as Iraqi Wins US LotterytheLotter.com Find Out How Traders Earn Real Cash OnlineBforex Online Trading The Brilliant Biologist Uncovering The Origin Of LifeBill Gates Only In Australia! - These 17 Things Will Shock You TravelTips4Life 31 Haunting Images of Abandoned PlacesLifestyle & Design Mag 15 Most Beautiful Women In The WorldCrazy Freelancer by Taboola Sponsored Links johnabayomi2 View all posts by johnabayomi2 → Previous Post Late Ronke Shonde with her alleged killer husband during their 'sweet' days Murder of banker: Late wife feared hubby would kill her —Source You might also like Liberian president appoints son head of central bank Liberian president appoints son head of central bank How Ekiti under-aged girls are turning into comfort women How Ekiti under-aged girls are turning into comfort women Herbalist with 48 wives, 200 children in trouble Herbalist with 48 wives, 200 children in trouble Why strike must go on tomorrow, by NLC Why strike must go on tomorrow, by NLC The most dangerous day in a woman's life The most dangerous day in a woman's life Messi floors Ronaldo again Messi floors Ronaldo again Why I don’t wear pants Why I don’t wear pants Jonathan's ex Jonathan's ex Recommended by Disclaimer Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof. 6 comments Livefyre Sign in 322 people listening oluruntobi austine KunleAdeFidelisEvaace102keys22AmadiItiri1 Newest | Oldest ummuzee ummuzee @ummuzeefrom Twitter 33m @Jaynumedia @vanguardngrnews, sometimes you wonder how journalists become experts in other fields, and jump into conclusions all d time . Reply on TwitterRetweetLikeFlagShare LikeReply AmadiItiri1 AmadiItiri1 53 minutes ago It shall be well FlagShare LikeReply keys22 keys22 59 minutes ago Just a few attacks in delta and u are already lost. Mr President leave our oil alone, and find oda means to sustain Nigeria... U can't b using our resources to enrich d north... We no go gree oooo, we no go gree. FlagShare LikeReply ace102 ace102 1 hour ago Like Nigerian soil cannot grow those grass!!! Awful people. Herdsmen from Enugu, Ondo will have to walk back to Kano so they can access Buhari's imported grass. We are talking of reducing Naira's exposure to dollar, they are talking of importing grass!!! Is imported pen, toothpick not better than common grass? What a nation! FlagShare LikeReply Lawrence Onyemaechi Lawrence Onyemaechi 1 hour ago APC as a political party has no clear plan and vision on how to move the country forward. Let them show us their road map FlagShare LikeReply
Read more at: http://www.vanguardngr.com/2016/05/2016-budget-faces-cash-flow-emergencies-may-lose-n1-4trn/
