Nigeria loses an average of N1 trillion annually as production cost in the exploration of crude oil, Chairman of the House of Representatives Standing Committee on Appropriation, Hon. Abdulmumin Jibrin (APC, Kano) disclosed.
Jibrin, who disclosed this to while fielding questions from newsmen on the 2016 budget, said that, as a result of the dwindling international market price of oil, the House would consider a reduction of the benchmark of $38 per barrel at the time the budget proposal was prepared.
He noted that with the current price of about $30 per barrel, there was the need to review the benchmark to meet with the current realities.
“One very important aspect that swallows a large chunk of the money in the budget is the cash call and production costs. Many people take their eyes away from production costs, but it is critical.”
“This is because, every year, we pay an average of N1trillion as cost of production. So, it is important that, this time around, we need to sit with relevant authorities in the oil and gas sector to see the details of this production cost, to ensure the country is not just being short-changed.”
“We are just mopping a lot of money from the first line charge just to give to our foreign partners. The benchmark has been pegged at $38 and, of course, we have known that the oil price has gone much below that figure.”
“I am sure that during this budgeting period we will engage again with the Committee on Finance and relevant committees and we should be able to peg the benchmark at a very safe figure that should be more realistic,” he added.
