The Federal Government’s earnings from oil royalties and others ballooned from about N4tn to N12tn following the devaluation of the naira, The PUNCH reports. This represents a 200 per cent jump in earnings to the government through its Nigerian Upstream Petroleum Regulatory Commission.
A latest report from the NUPRC showed that the revenue generated by the commission rose from N4tn in 2023 to N12tn in 2024. The surge came after President Bola Tinubu’s June 2023 decision to float the naira, causing it to weaken significantly.
The currency slid from N473/$ to nearly N800/$ mid-year and eventually closed 2023 at an average of N1,000 to the dollar. In 2024, the naira depreciated further, averaging around N1,600 to the dollar.
However, industry analysts stated that though the naira devaluation prompted the rise, the government raked in considerable earnings from oil and gas royalties during the review period. They urged the government to put the funds to good use for economic development.
With most of NUPRC’s charges denominated in US dollars, the naira depreciation appeared to have significantly boosted the agency’s naira revenue when dollar inflows were converted.
According to NUPRC’s annual report, the 2024 revenue also outperformed the commission’s budget by a wide margin. While NUPRC had projected N6.93tn for the year, it exceeded this target by 176.74 per cent, collecting N12.25tn.
A breakdown of the revenue showed that oil and gas royalties, including the Nigerian National Petroleum Company Limited’s receivables, remained the dominant source, bringing in N11.08tn.
This accounted for over 90 per cent of the total revenue and represented a 195 per cent increase over the N3.76tn collected from the same source in 2023. The report also showed that gas flare penalties followed, with N391.26bn collected in 2024, nearly triple the N140.54bn collected in 2023.
Concession rentals generated N23.71bn, more than double the N10.21bn collected the previous year, while miscellaneous oil revenue rose to N35.20bn from N16.38bn.
Signature bonuses, which stood at N256.99bn in 2023, rose to N369.58bn in 2024. Similarly, lease renewals, which yielded no revenue in 2023, returned N230.73bn in 2024.
Meanwhile, revenue from ’Good and Valuable Consideration’ dropped to N117.02bn from N163.63bn in 2023, suggesting a better performance in the previous year. Our correspondent reports that the N4,344,220,368,740.36 revenue generated in 2023 would amount to approximately $6.21bn when converted at an exchange rate of N700 to the dollar.
In 2024, the commission’s generated N12,250,607,908,453.30 revenue would translate to about $7.66bn using the prevailing exchange rate of N1,600 to the dollar.
However, if the naira had remained at N700/$1 in 2024, the $7.66bn revenue would have amounted to just N5.36tn. At an exchange rate of N500 to the dollar, it would have been around N3.83tn.
Meanwhile, experts said the commission’s revenue performance reflected the combined impact of currency devaluation, improved collections across all major streams, and increased regulatory efficiency.
In January, the NUPRC Chief Executive, Gbenga Komolafe, said the commission was targeting N15tn revenue this year. “We’re ramping up federal revenue. Last year, that is for 2024, you remember that the commission achieved and surpassed its revenue generation by about 163 per cent. This year, our target has been increased to about N15tn.
“So, the commission, recognising that, we have equally devised a strategy. Of course, N15tn is so large, but then we are not daunted; we are not intimidated. Rather, we are defining a strategic approach to achieve that target,” he stated.
However, a Professor of Economics, Segun Ajibola, said it would be difficult to know whether or not the NUPRC improved in its performance if all it did was to convert dollar earnings to a devalued naira.
Ajibola said the regulator should not have declared its financial results in naira only, but also in dollars, since most of its earnings are denominated in dollars.
“Since they generate their revenue in dollars, they should not be telling us what they have done in naira. Let’s compare like terms — dollar income in 2023 compared with dollar income in 2024. Then we’ll be able to say whether they have had some real improvement or not.
“But if the situation is such that you convert dollar income in the year 2023 to naira, and you convert dollar income in the year 2024 to naira, there will be a distortion in that analysis. We won’t be able to see whether it’s just a nominal figure or a real figure. But from the analysis, it is clear that it’s just nominal,” he stated.
In real time, Ajibola explained that Nigerians will be unable to say whether the NUPRC has improved in its performance or not. “Let’s compare dollar income in 2023 with dollar income in 2024, then we will be able to see the trend,” he stated, stressing that the naira is no longer what it used to be in May 2023.
