Members of the Senate Committee on Finance Monday queried the Nigerian National Petroleum Corporation over what they described as “very high cost of oil production in Nigeria.”
Also Monday, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said even though recession is imminent as a result of the COVID-19 pandemic, the Federal Government is already working to minimize its harsh effects.
The Senators spoke when the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed led heads of revenue generating agencies to defend the revised 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) submitted to the National Assembly last week.
The Senators expressed worry over a situation where the cost of oil production was put at $21.2 per barrel and the price of crude oil in the revised budget was put at $25, which suggest a marginal profit of $3 for the country.
Other revenue generating agencies at the session included the Nigeria Customs Service, Federal Inland Revenue Service (FIRS).
The Director General of the Debt Management Office, Patience Oniha and her counterpart in the Budget Office, Mr. Ben Akhabueze were also at the session.
The Minister of State, Finance, Budget and National Planning, Mr. Clement Agba was also part of the Minister’s team.
Trouble started for the NNPC when its Chief Operating Officer (Upstream), Engineer Yemi Adetunji, who represented the Group Managing Director, Engr. Mele Kyari, was called upon by the Chairman of the Committee, Senator Solomon Adeola (APC – Lagos West) to explain why the cost of oil production in Nigeria is far higher than those of other oil producing countries of the world.
According to Senator Adeola, while the cost of oil production in Saudi Arabia is $4 per barrel and $3 per barrel in Russia, it is $21.2 per barrel in Nigeria.
He said that this shows that Nigeria only earns a very poor marginal profit of about $3 per barrel based on new oil price benchmark of $25 per barrel in the revised 2020 budget.
The NNPC’s COO, Adetunji, in his response, attributed the high cost of oil production to series of peculiarities ranging from security to crude oil theft.
However, almost all the members of the committee disagreed with Adetunji’s claim even as they described as unacceptable.