Ms. Okonjo-Iweala stated this while fielding questions from newsmen on the drop in oil production at the ongoing Spring Meeting of the World Bank and the International Monetary Fund, on Thursday in Washington .
She said the drop in crude oil production is due to a variety of reasons including loss of 150,000 barrel per day due to recent shut-in of shell Nembe operations.
“Shut-in due to force Majeure declared at Qua Iboe Terminal, resulting in a loss of about 65,000 barrel per day.
“Some other losses including those of Agip, loses at Okono, Brass and Amenam Terminals due to repair works on equipment,’’ she said.
“Force majeure” is a common clause in contracts that essentially frees both parties from liability or obligations in case of unforeseen circumstances beyond the control of the parties.
The circumstances include war, strike, riot, crime, or an event described by the legal term ‘Act of God’ (such as hurricane, flooding, earthquake, volcanic eruption) among others.
Such circumstances prevent one or both parties from fulfilling their obligations under the contract.
According to the minister, “a great deal of loss in production is also closely linked to oil theft and illegal bunkering, which have been going on for some time.”
She said the thefts were getting more evasive as the criminals were going beyond the outer pipelines and moving into more sensitive pipes.
“We estimate total loss at over 300,000 barrel per day,’’ she said.
A barrel of crude oil has largely been at above $100 since July last year. 300,000 barrels daily for 30 days gives 9 million barrels monthly; giving a total of over $900 million monthly.
Ms. Okonjo-Iweala said that the current production figure was lower than the actual oil production level in 2012 and lower than the projected output of 2.528 million barrel per day in the 2013 budget.
This, she said, would underpin the oil production projections in 2013 budget which was derived in consultation with the NNPC.
“In dealing with the impact of this on the revenue, the government has had to draw on the Excess Crude Account which was set up precisely for this purpose that is to deal with unanticipated losses due to output and price variation.
“This has reduced the balance in the excess Crude Account to about 6.9 billion dollars,’’ she said
She added that the president had been briefed on these developments and action were being taken on different front to stabilise the situation.
According to her, the president has ordered the Navy to increase its patrols around the hotspots of oil theft and illegal bunkering.
The NNPC had also said that Nigeria lost about N190 billion to crude oil theft alone between January and March.
The minister also said the nation had also witnessed shortfall in other sources of revenue including the Federal Inland Revenue Services (FIRS) and the Nigerian Customs services.
She said to help cushion the effect; government would roll out strategies to improve tax generation and administration to ensure the diversification of the revenue base.
“We are going into a drive, as you know, one of our mission in finance is to increase our overall generation in taxes especially from the corporate and all other sectors.
“We have large gaps in the tax collection in the corporate sector, there is a lot of room to improve and therefore, we have been working quite closely with FIRS and some consulting firms to help to try and look at area where gaps exist,” she said.