Nigeria Senate wants $75/bbl oil benchmark in budget
Category: Nigerian Economy
Friday January 20, 2012 12:11pm
Nigeria's Senate has said it wants to adopt a $75 per barrel oil price benchmark in the 2012 budget, up from the $70 proposed by the finance ministry, which would give the government more money to spend and leave less for savings.
Nigeria saves money into an Excess Crude Account (ECA) over the benchmark price in its budget to cushion Africa's second largest economy against potential oil price shocks. Oil prices were trading on Friday at around $100 per barrel.
President Goodluck Jonathan attempted to remove fuel import subsidies on Jan. 1 but had to partially reinstate them under intense pressure from the public, which staged 8-days of strikes and mass street protests.
Raising the benchmark price would help meet the unaccounted for costs associated with the fuel subsidy but leaves less money in the ECA and for a recently set-up sovereign wealth fund.
The ECA contained more than $20 billion in 2007 but despite a period of record high oil prices since, the account has been drained and only contained $3 billion at the end of last year.
The Senate made its recommendation on the benchmark oil price in a review of the government's 2012-2015 medium term fiscal framework, which was submitted to lawmakers in October last year. The Senate approved the other major figures proposed in the government's fiscal plan.