A dip in the Federal Government’s revenue is in the offing. This is because following the cut in oil production quota by the Organisation of Petroleum Exporting Countries (OPEC) and its allies.
The revenue accruable to the Federal Government from the sale of crude oil is estimated to drop by a cumulative sum of about N140billion in May and June.
OPEC and its allies, a group called OPEC+, decided in April to cut oil output by 9.7 million barrels per day to shore up oil prices after they crashed massively, following the widespread lockdown measures targeted at halting COVID-19 spread.
Based on the Declaration of Cooperation agreement by OPEC+, the country had to reduce her daily crude oil production by 216,000 barrels all through the month of May. The country has continued to comply with the agreement of OPEC+.
At the 179th Meeting of the OPEC Conference at the weekend via a videoconference, OPEC Secretary-General, Mohammad Barkindo, explained that the voluntary production adjustments of 9.7 million bpd would be in May and June 2020.
This implies that Nigeria will further cut its production by about 216,000 bpd through June, translating that for the 60-day period (May and June), the country would have reduced production by 12.96 million barrels.
Therefore, using a conservative average price of $30/barrel, the country’s earnings during the two-month period would reduce by $388.80million or N139.97 billion (at the official exchange rate of N360 to one dollar).
Based on the above, Nigeria will be losing nothing less than N140 billion in May and June as it joins OPEC+ in the Declaration of Cooperation agreement on crude oil production cut.