Nigeria loses N2.56 trillion to eight-year oil pricing dispute – Guardian

Nigeria may have lost an estimated N2.56 trillion ($8 billion) to the lingering price dispute between the International Oil Companies (IOCs) and Crude Oil Marketing Division (COMD) of the Nigerian National Petroleum Corporation (NNPC).

The sum which is more than a third of the 2016 budget of N6.1trillion, represents the estimated cumulative revenue losses from the under-assessment of the fiscal valuation on crude oil between 2006 and 2013, using the current exchange rate of N321 to $1, judging by the Nigerian Transparency International (NEITI) 2013 audit of the petroleum industry.

Based on the Official Selling Price (OSP), NEITI estimated that at least $1billion is lost yearly to crude price under-assessment.

The Joint Ventures (JVs) recorded the highest under-assessment of over $410.9 million followed by the Production Sharing Contracts (PSCs) with over $13.8 million and Marginal Fields/Sole Risk.

Since the parties are yet to resolve the dispute, it means that Nigeria, currently suffering from economic depression and in dire need of every petro-dollar it can get has lost even much more than that till date.

The development underscores the need for an adequate pricing framework to be clearly defined in the Petroleum Industry Bill (PIB), even as fiscal legislation is anticipated to be the last of the four bills on industry regulation to be presented to the National Assembly for consideration.