Nigeria’s government relies on oil for around two-thirds of its revenue and Africa’s largest economy is still largely dependent on crude production despite the current administration’s attempts to diversify away from the industry. Those efforts have yielded few results, economic data shows.
Under the deep offshore act, there was a provision in 1993 that allowed for the government to charge oil companies a premium for the administration’s share of sales once the price of crude exceeded $20 a barrel.
The Nigerian government has not enforced that provision but could now look to amend the law to enable it to do so, Emmanuel Ibe Kachikwu, the oil minister, told reporters after a cabinet meeting in the capital of Abuja.
“The net effect for us is close to $2 billion extra revenue for the federation,” Kachikwu said, adding that the petroleum ministry was working with the attorney general to look at the legislation.
“From 1993 to now, cumulatively, we have lost a total of $21 billion just because government did not act. We did not exercise it,” he said of the law, without explaining what amendment was needed.
The oil minister noted it would be difficult to recoup past losses, given oil companies that were not paying the government a premium for sales over $20 a barrel were not breaking the law.
However, the administration will explore whether there is an opportunity to get back some of the money, Kachikwu added.
The government is also pushing to have Nigeria’s three main oil refineries up and running at full capacity by 2019, the oil minister said.
Despite producing vast quantities of crude oil, Nigeria exports almost all of its crude for refining overseas before paying to have the final fuel products imported, a drain on foreign currency reserves.
The administration hopes to raise $2 billion for the refurbishment of the refineries from the private sector, and have them producing around 425,000 barrels of oil per day by the end of 2019, said Kachikwu.
Nigeria’s reliance on oil sales led to it falling into recession last year largely due to low crude prices and attacks by militants on energy facilities in the southern Niger Delta production heartland.
The OPEC member emerged from the recession - its first in 25 years - in the second quarter of 2017 as a result of higher oil receipts.