The Federal Government may have concluded plans to again, draw down from the Excess Crude Account (ECA) to partly make up for an estimated $12 billion (N1.9 trillion) revenue shortfall, occasioned by the lingering output disruptions and theft in the nation’s crude oil sector.
The ECA, a strategic oil revenue savings scheme by the government, currently has a balance of $5 billion, down from about $9 billion at the beginning of the year.
Finance Minister, Dr. Ngozi Okonjo-Iweala dropped the hint in Abuja Monday, during a chat with newsmen.
Okonjo-Iweala explained that the move has become imperative to keep the nation’s deficit budget under control, as she lamented the lingering twin challenges of oil theft and output disruptions in the Niger Delta region, which have been assailing the economy over the years.
With a 2013 budget based on a daily output of 2.53 million barrels and an oil price of $79 a barrel, the administration expected revenue of almost $80 billion from exports.
But in the first half of the year, oil receipts amounted to $28.2 billion, more than $7 billion below the estimate, according to figures from the Central Bank of Nigeria (CBN).
“What is amazing now is that we’ve had this quantity of shock and we were able to weather it,” Okonjo-Iweala said. “You can say theft, but it’s still a quantity shock.”
Nigeria, Africa’s most populous country of more than 160 million people, depends largely on crude oil exports for about 80 per cent of its revenue and 95 per cent 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 militants fighting for greater control of the region’s resources.
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 was with the Finance Minister during the interview.
The government saves the balance of oil revenue above the budgeted price in the ECA.
The CBN governor, Lamido Sanusi, noted in an interview in Oslo, Norway, yesterday, that the country’s vulnerability to shocks has been heightened by lower revenue from oil, putting pressure on the currency.
According to him, “the great challenge now is that the fiscal buffers are not as strong as they would have been because of the revenue shortfall”.
He added that “if there are any adverse external developments that would feed into the weak revenue profile that could put pressure on exchange rates”.
The CBN draws down its foreign currency reserves to sell dollars at its twice-weekly auctions to keep the naira within a band of three per cent around N155 per dollar.
Information from The Guardian was used in this report.