The Central Bank of Nigeria (CBN) has attributed the significant decline in Nigeria’s oil revenue during the third quarter of 2024 to a combination of aging pipeline infrastructure and operational inefficiencies. According to the bank’s latest economic report, oil revenue plummeted by 24.72 percent compared to the previous quarter, primarily due to lower receipts from petroleum profit tax and royalties.
This substantial shortfall, which amounted to a 75.39 percent deviation from the quarterly target, was primarily driven by frequent production shutdowns caused by deteriorating pipelines and oil installations. Despite a modest increase in crude oil production, challenges such as theft, vandalism, and inadequate infrastructure severely hampered Nigeria’s ability to capitalize on its oil resources.
The report highlighted that the aging infrastructure not only hindered production efficiency but also compromised the country’s ability to meet its OPEC production quota. Furthermore, global market dynamics contributed to the revenue decline, with the average price of Nigeria’s Bonny Light crude oil falling by 5.45 percent during the quarter.
While the oil sector struggled, the Nigerian economy as a whole recorded growth of 3.46 percent, driven primarily by the non-oil sector. However, the oil sector’s growth slowed significantly to 5.17 percent year-on-year, reflecting the impact of operational inefficiencies and declining crude oil prices.
The fiscal implications of this revenue shortfall were substantial, with federally collected revenue falling significantly short of the budget benchmark. Although the fiscal deficit narrowed compared to the previous quarter, it still exceeded the quarterly target by a significant margin.
The CBN report concluded that Nigeria’s ambitious goal of achieving a 2 million barrels per day (mbpd) oil production target by the end of 2024 remains at risk due to the persistent challenges facing the oil sector.
