FG Records $12.74m Drop In Foreign Investment Flow To Oil Industry | Independent Newspapers Limited
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FG Records $12.74m Drop In Foreign Investment Flow To Oil Industry

Oil industry
Posted: Sep 20, 2016 at 5:30 pm   /   by   /   comments (0)

By Charles Okonji.

LAGOS – There are strong indications that the Nigerian petroleum industry has been recording low activities, which may not be far from the incessant attacks on the oil and gas facilities, as information gathered disclosed that the capital import into the sector declined sharply by $12.74 million to $8.09 million in the second quarter of this year.

The National Bureau for Statistics (NBS), which stated this in its Nigerian Capital Importation Report for the Second Quarter of 2016, informed that foreign capital inflow into the oil and gas sector in the quarter represented a drop of 61.2 per cent, from total inflow of $20.83 million in the first quarter of the year.

NBS added that total value of capital import into Nigeria in the second quarter of 2016 was $647.1 million, which represented 8.98 per cent decline over the first quarter of this year, and a fall of 75.73 per cent relative to the second quarter of 2015.

According to NBS, tis figure would be the lowest level of capital import into the nation’s economy on record, as it represented the largest year-on-year decrease, stressing that the decline in the value of capital import was symptomatic of the economic recession

NBS stated: “The second quarter saw the economy enter into the first recession during the rebased period, according to the technical definition of two consecutive periods of decline. This may suggest less profitable opportunities for investment.

“In addition, in the second quarter there was considerable uncertainty surrounding future exchange rate policy which may have deterred investors. The Naira was allowed to depreciate towards the end of the quarter. These factors were likely to have contributed to the record decline in capital importation.

“Year on year, the importation of capital declined for each broad type – foreign Direct Investment, Portfolio Investment and Other Investment— but Portfolio investment recorded by far the largest decline of 88.76 per cent year on year, compared with declines of 37 per cent and 1.22 per cent for Foreign Direct and Other investment respectively.

“Compared to the previous quarter, however, Foreign Direct Investment recorded the largest decline of 23.75 per cent, compared with a decline of 9.49 per cent for Portfolio investment and an increase of 1.24 per cent for other investment.

“As a result of these change, other investment replaced Portfolio as the largest component of capital importation, and accounted for 41.53 per cent, compared with shares of 37.91 per cent and 20.56 per cent for Portfolio and Foreign Direct investment.

“In the same quarter of the previous year, Portfolio investment accounted for 81.88% of total investment, which highlights the fact that Portfolio Investment has been the hardest hit by recent economic events. This is possibly due to Portfolio investment having a shorter term focus than other investment types,” it stressed.

The Central Bank of Nigeria (CBN), in its Economic Report for the Second Quarter of 2016, has equally disclosed that the nation’s crude oil earnings had dipped by N128.94 billion to N537.19 billion in the second quarter of 2016 due to attacks on oil and gas installations in the Niger Delta.

The CBN’s report pointed out that the country’s oil earnings dropped by 19.36 per cent from N666.13 billion recorded in the first half of 2016, attributing the development to the continued fall in receipts from crude oil and gas exports arising from persistent low price of crude oil and incidences of shut-ins and shut-downs at some oil terminals over pipeline vandalism.

According to the apex bank, Nigeria’s crude oil production, which included condensates and natural gas liquids, stood at an average of 1.54 million barrels per day or 141.68 million barrels for the second quarter of 2016.

CBN said: “”Nigeria exported 1.09 million barrels per day of crude oil or 100.28 million barrels in the second quarter of 2016, while deliveries to the refineries for domestic consumption stood at 0.45 million barrels per day or 41.40 million barrels during the review quarter.

“At N1.159 trillion, total federally-collected revenue was 51.3 and 8.6 per cent lower than the quarterly budget estimate and the preceding quarter’s receipts, respectively. At N537.19 billion or 46.3 per cent of the total, gross oil receipt was lower than both the provisional quarterly budget and the receipts in the preceding quarter.

“Non-oil receipts, at N621.86 billion or 53.7 per cent of the total, was above the level in the preceding quarter by 3.2 per cent, but was significantly lower than the proportionate quarterly budget.

“Federal Government retained revenue was N677.88 billion, while total expenditure was N1.769 trillion, resulting in an estimated deficit of N1.091 trillion in the second quarter of 2016, compared with the proportionate quarterly budget deficit of N555.49 billion.

“The gross federally-collected revenue, a net sum of N665.67 billion, was transferred to the Federation Account for distribution among the three tiers of government and the 13.0 per cent Derivation Fund. Also, N100.92 billion, N186.83 billion and N48.09 billion were transferred to the Federal Government Independent Revenue, VAT Pool Account and Others, respectively.

“The Federal Government received N323.16 billion, while the state and local governments received N163.91 billion and N126.37 billion, respectively. The balance of N52.23 billion was allocated to the 13.0 per cent Derivation Fund for distribution among the oil-producing states.

“The Federal Government also received N28.02 billion from the VAT Pool Account, while the state and local governments received N93.41 billion and N65.39 billion, respectively,” it stressed.