Crude export: Nigeria gains only 5% of total revenue
Prof Kayode Soremekun
Crude export: Nigeria gains only 5% of total revenue
With the nation’s position as Africa’s largest producer of crude oil, Nigeria only gains a meagre 5 per cent of the total revenue generated from its crude oil exports to international markets.
A professor of Political Science at the University of Lagos, Kayode Soremekun, revealed this at a one-day symposium on the Nigerian Petroleum Industry on Thursday in Abuja, noting that certain components of the Nigerian crude are not remitted to the federation account after export.
He also stated that the nation lacks a substantial source of revenue from the oil sector compared to other oil-producing countries.
The event themed, “Nigerian Petroleum Industry: The way forward” was organised by Class Masters Ltd, in partnership with the Nigerian National Petroleum Company Limited.
Recall that the NNPCL, on behalf of the Federal Government, sells Nigeria’s crude oil for refined products under its Direct Sale Direct Purchase programme for revenue.
Under the DSDP scheme, initiated in 2016, selected overseas refiners, trading companies and indigenous companies are allocated crude supplies in exchange for the delivery of an equal value of petrol and other refined products to the NNPCL.
However, other components of crude, such as Paraffins, Cycloalkanes, Aromatics, Sulfur Compounds, Asphaltenes, Resins, and Trace Metals, are retained in the refining country with its accrued revenue not remitted to the federation account.
Speaking in his keynote address, the academic expressed concern about the disruptive impact of politics on the oil sector, emphasizing that resolving environmental degradation in the Niger Delta is not a difficult task.
Nigeria gains only 5% of total crude export revenue.
He said, “Recently, I was able to undergo training on what happens to crude oil and by the time the facilitators broke the crude oil into its various components, we discovered that Nigeria gets only a tiny fraction of revenue. Nigeria is only getting only five per cent of what we should be getting from exporting crude.
“The smallest tanker of crude oil that leaves this country and is broken into parts abroad and sold can pay the salary of senior staff for six months. So you can see the monumental loss that happens to Nigeria for every crude sale. This is why we don’t get enough revenue because we don’t know, just as the Bible indicated people perish for the lack of knowledge.
“Despite the lacuna identified, Nigeria and Nigerians have never refrained from basking in the glory of being an oil power. It’s an all-power status which thrives mainly on the petrol dollars that come into the country’s treasury.
“By contrast, we don’t know much about the oil industry and if we do, we have continued to behave as ignorant outsiders in the industry.”
He added that the nation’s oil sector can only be salvaged if it employs the policy direction used in Norway, Indonesia or Malaysia.
“The point again is that Nigeria has fixated its attention on only the upstream segment of the sector, while there are three stages in the sector: Upstream, Midstream and Downstream. Nigeria is only present at the upstream and it’s passive through joint ventures.
“This anomaly masks every aspect of the Nigerian economy. In specific terms, we only export our raw materials and, in the process, export jobs to other countries.”
In his address, the Managing Director, Class Masters Ltd, Paddy Ezeala, said the symposium is to discuss the way forward for the oil industry in light of emerging challenges and energy transitions.
“The symposium is a gathering of experts and stakeholders to discuss this industry that has been with us for close to 70 years and to see whether we can be able to develop a way forward that is agreeable to everybody. So, there are a lot of concerns, social, economic, and environmental. Now we are talking about energy transition. How are we transiting? How are we moving? The public should be aware. People should be environmentally conscious.
“People should know how other factors around us, like insecurity, are affecting the production of oil. We can barely meet our OPEC quota. Various factors are causing this,” he stated.
