The oil and gas sector, last week, made a wide impression on government revenue. It impacted even the governed and their kitchen and transport grooves.
Oil Sector picks up along with the GDP in Q1 2021
The contribution of the oil sector to the GDP picked up this quarter. This followed a series of declines in all quarters. After the first quarter of last year (Q1 2020), the latest GDP report shows.
The Oil sector contributed 9.25% of the aggregate GDP this quarter over 5.87% in the previous quarter. This is an increase of 57.6% in the value of its contribution. But this quarter’s output is still less by 2.7% than the contribution same quarter last year
And the Overall GDP grew this quarter
The NBS revealed nominal GDP grew to 40.01 trillion naira in the first quarter of this 2021 year. This was from 35.65 trillion naira in the first quarter of 2020
This indicates a 12.25% nominal growth in the country’s output in the first quarter of 2021. With inflation, it is just a 0.51% real growth in output. This real growth of 0.51% in the first quarter this year is an improvement on the real growth in the first quarter of last year, which was 0.11%.
The services sector contributed the highest to the GDP, with a 53.9% output value, although the contribution of the sector is less by 0.7%. This when compared with the last quarter (Q4 2020). The sector’s contribution also reduced by 0.9% when compared with the same quarter last year.
The Agriculture sector contributed least, with 22.35% of GDP this quarter, and a significant reduction by 17.06% compared to its performance the previous quarter.
However, the Industrial sector showed the greatest improvement in its contribution to the country’s GDP this quarter. The contribution from the sector was the second largest, with 23.75% of the total GDP. This performance was the highest overall increase of 26.51% over the previous quarter and 0.43% over this quarter last year.
$10 billion potential revenue from renewal of 20 years’ oil block
The state-owned oil enterprise, NNPC, hopes to secure a potential $10 billion (over N4 trillion) investment in the Bonga bloc, owing to success from the dispute resolution during the week among its partners.
Amidst the controversy trailing the OPL 245 Malabu deal during the week, the Nigerian government eyes another $780 million (about N320 billion) immediate revenue from oil bloc renewal deals.
While the country’s oil reserves are dwindling, oil revenue still presents a disincentive to the government’s aggressive development of other viable sectors. Several instances of price fluctuations have almost crippled governance due to lower oil revenues than projected.
NNPC’s 20% Equity Stake in Dangote Refinery
The Nigerian National Petroleum Corporation (NNPC) is in the advanced stage of acquiring a 20% minority equity share at the Dangote refinery. This move, the state-owned enterprise says, is to ensure the uninterrupted flow of petroleum products.
Nigeria relies on the importation of petroleum products to provide energy for its citizens annually. Buying into the refinery is assuming local supply of the product will ease the pressure on importation.
However, this comes at a time when the government just approved the sum of $1.5 billion for the repairs of the Port Harcourt refinery.
The NNPC has had issues with effective turnover on business. One of the state-owned oil companies that incurred a loss in 2019 when others recorded huge turnovers.
As OPL 245 oil block expires, What is next for Shell & ENI in Nigeria?
The scandal-plagued OPL 245 oil field expired on May 11th 2021 was reacquired by the Federal government during the week. The expiration of the OPL 245 oil field comes ten years after Shell and Eni paid $1.3bn for the license in a scandal-plagued deal that sparked numerous criminal investigations and trials.
The oil field is said to warehouse 9 billion barrels of crude oil which remains untapped having been foiled in a series of legal tussles between the Federal Government of Nigeria, SHELL and ENI.
Source: Premium Times
Despite the expiration of OPL 245 license, the Human and Environmental Development Agenda (HEDA Resources Centre) wrote that the oil field has been booked as an asset in Eni company’s accounts for 2020. However, the company, Shell, acknowledged that this may need to be reassessed “when preparing the next financial information”. Shell wrote down the value of its 50% share in the license in 2020.
In March 2019 President Buhari had rejected the request to renew the licence and stated that no further correspondence would be considered until criminal and civil court proceedings in Milan and London related to the 2011 deal had been concluded.
Since Buhari’s reply, Eni’s and Shell’s Nigerian subsidiaries have also been charged in Nigeria with corruption over the deal.
Cooking Oil too
The average year on year all-food inflation in April was 22.72%, according to official Data from the NBS. However, analysis of NBS’ selected food prices showed that 9 out of 43 sampled food items across the country had a year on year inflation higher than 20%, in the first quarter of 2021. Palm Oil and Vegetable Oil were among the nine, with 25% and 22% inflation experienced in the quarter.
Increasing Cost of Riding Okada
In Nigeria, on the average, people who boarded a commercial motorcycle (Okada) this April paid almost double what they paid last April. The change from an average of N148 to N276 per drop reflected an 86% inflation in this mode of transport.
Also, when compared with the N271 average price of transport on commercial motorcycles in March this year, there was a 1.8% increase in the price of boarding okada in April.
However, Air Travel, while the most expensive among all the other means of transport, has the most stable of prices. Only the average price of air transport decreased this April by 0.2% compared to the previous month.
Air transport also had the least inflation of 18% when average passenger fare of N36,409 this April is compared to N30,744 in April last year.Besides becoming more and more financially costly to ride on commercial motorbikes, it is also risky and physically costly due to the frequency of accidents that occur while riding on it. Yet, in many circumstances, the Okada remains the most accessible means of transport for many Nigerians.