Crude Oil Crash: It is time for Nigeria to build strategic crude oil reserve-Atiku

.We must be in business for the best interest of our economy, says Atiku
By Al-Hameen Oluwaseyi

 As the impact of the deadly disease, coronavirus pandemic continues to hit the global oil prices, the former Vice President of Nigeria, Alhaji Atiku Abubakar, has urged the Nigerian government to build a strategic crude oil reserve, with massive storage capacity that can hold at least a month’s worth of its OPEC production capacity.

It is no longer news that Nigeria is one of the most affected countries with no storage space to store excess production.  In fact, tens of millions of barrels of her crude oil in scores of vessels cruising the seas, with no one calling to buy even at a $5 discount per barrel.

Thin is even, as the nation coughs double amount of about $350,000 per day for renting vessels because of the nation’s lack of onshore crude oil storage.

But while commenting on this development on Wednesday, the former Vice President on his verified Twitter handle @atiku said, “the global oil market continues to suffer from the vagaries of the coronavirus pandemic, as prices continue to crash due to the sudden, massive and unexpected drop in worldwide demand for crude oil.”

He explained that the features market for commodities is a turbulent one, due to unforeseen hazards that come and go. “Today, it is COVID19; tomorrow, it will be something else.

“It is time for Nigeria to protect her economy from being tossed to and fro by circumstances beyond our control. We must assert our sovereignty, by exerting more influence over the global trade in crude oil, and other features”, he twitted.

According to him, if we build such an infrastructure, we will not have to sell our crude at a production loss. We will be in a position to stockpile the product in our reserve until such time as prices improve.

“Indeed, other nations take such measures to protect their economy. North American and European nations have such internal controls to protect almost every sector of their economy – from agriculture, automobile, and even intellectual property. Nigeria cannot be left behind. We must be in business for the best interest of our economy.”

On recommendation, he said, “I would also strongly recommend that we discuss with our partners in the Organisation of Petrol Exporting Countries, and obtain a concession, whereby we can defer our daily quota, such that when we undersell, due to a crash in the price of crude oil, we can oversell when the prices stabilize, subject to the condition that we balance out our quota.

“Nigeria’s oil industry remains more susceptible to outside influences, than to internal control. This measure can flip that, and make our oil industry more stable, even when there is global instability. This will translate to greater economic independence on our part”, he said.

Meanwhile, the Federation Accounts Allocation Committee (FAAC) on Wednesday shared a total sum N 780.9 billion for March 2020 Federation Account Revenue, in spite of the sharp drop in the nation’s oil revenue, and the economic impact of the COVID-19 pandemic.

The statement from the office of the Accountant-General of the Federation at the end of the virtual FAAC meeting of the representatives of the federal, states and local governments, along with Federal Capital Territory counterparts, showed that the N780.926 billion comprised Statutory Revenue, Value Added Tax (VAT), and Exchange Gain.

It was also revealed the balance in the Excess Crude Account (ECA) grew a little to $72.221 million.

The gross statutory revenue for the month of March 2020 was put at N 597.676 billion.

This was higher than the N466.058 billion received in February 2020 by N131.618 billion.

Value Added Tax (VAT) yielded gross revenue of N120.268 billion in March 2020 as against N99.552 billion in February 2020, resulting in an increase of N20.716 billion.

A total of N62.928 billion was available from Exchange Gain in the month under review.

The OAGF also stated that: “The Statement of Accounts indicated that from the total revenue of N780.926 billion, the Federal Government received N264.330 billion.”

Continuing, the Office said: “The State Governments received N181.487 billion, and the Local Government Councils received N135.950 billion.

“The Oil Producing States received N38.751 billion as 13 per cent derivation revenue while the cost of revenue collection by Revenue Agencies and allocation to the North-East Development Commission (NEDC) was N160.408 billion.”

According to the Statement of Accounts, the Federal Government received N217.773 billion from the gross statutory revenue of N597.676 billion.

The State Governments received N110.457 billion and the Local Government Councils received N85.158 billion.

The sum of N32.299 billion was given to the relevant States as 13 per cent derivation revenue and N151.989 billion as cost of revenue collection by Revenue Agencies and allocation to NEDC.

The federal government received N16.777 billion from the Value Added Tax (VAT) revenue of N120.268 billion available in the month of March 2020. The State Governments received N55.925 billion, the Local Government Councils received N39.147 billion, while the cost of collection by Revenue Agencies and allocation to NEDC was N8.419 billion.

The Statement confirmed that the Federal Government received N29.780 billion, the State Governments received N15.105 billion, the Local Government Councils received N11.645 billion and the Oil Producing States received N6.452 billion from the total revenue of N62.982 billion available from Exchange Gain.

It also disclosed that in the month of March 2020, Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Import and Excise Duties, Oil and Gas Royalties and Value Added Tax (VAT) all recorded substantial increases which resulted in the large volume of money shared.

The monthly Federation Account Allocation Committee (FAAC) meeting for the month of April 2020, where the sharing of the March 2020 revenues was discussed, was held through virtual conferencing in line with the physical distancing directive by the Nigeria Center for Disease Control (NCDC).

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