The government will draw down its oil savings in the Excess Crude Account to compensate for the drop in revenue to keep the budget deficit under control, Okonjo-Iweala said in an interview with Bloomberg in Abuja.
Nigeria depends on crude exports for about 80 per cent of government revenue and 95 percent of export income. Criminal gangs tapping oil from pipelines for illegal sale have posed the biggest threat to output since a government amnesty in 2009 reduced armed attacks led by rebels fighting for greater control of the region’s resources.Savings in the special crude account have dropped by half as President Goodluck Jonathan’s government tries to make up for the drop in oil revenue and fund a deficit that has reached 2.5 percent, according to the central bank. With a 2013 budget based on a daily output of 2.53 million barrels and an oil price of $79 a barrel, Nigeria expected revenue of almost $80 billion from exports. In the first half of the year, oil receipts amounted to $28.2 billion, more than $7 billion below the estimate, according to central bank figures.
The revenue shortfall due to output disruptions will probably be between $6 billion and $12 billion, said Bright Okogu, director of the Budget Office, who sat in on the interview with the finance minister. The government saves the balance of oil revenue above the budgeted price in the Excess Crude Account, which had a balance of just under $5 billion, down from about $9 billion at the beginning of the year, according to the minister. Nigeria’s vulnerability to shocks is heightened because of lower government revenue from oil, putting pressure on the currency, central bank Governor Lamido Sanusi said in an interview in Oslo.
Okonjo-Iweala is seeking to meet a budget deficit target of 1.9 percent of gross domestic product this year. The shortfall reached 2.5 percent in the second quarter during the peak of the output outages, according to data from the central bank. President Goodluck Jonathan is due to present his 2014 budget to lawmakers on Nov. 12. ”When there’s a breakage the impact is that the pipes are shut down, the effect is that 400,000 barrels are shut down,” Okonjo-Iweala said. “The actual theft is like 70 to 80,000 barrels a day.”
The average price of Nigeria’s light, sweet crude has stayed above $100 a barrel this year. The official selling price of Nigeria’s benchmark Qua Iboe crude for November loading was set at $3.50 a barrel more than dated Brent, the European benchmark, according to state-run Nigerian National Petroleum Corp. Dated Brent was priced at $108.92 a barrel at 9:18 a.m. in London. Income earned by Nigeria from crude exports, taxes and other sources are shared among the three tiers of government, including the federal, 36 state governments and 774 local councils. At allocation meetings in August and September, funds received were not enough to meet expected allocations, prompting complaints from some state officials. The disputes over allocations “are over,” Okonjo-Iweala said. “Everybody realizes that we have to allocate what comes into the coffers.”
Culled From: Vanguardngr
