Tuesday, April 12, 2011

Nigeria's windfall oil savings recover to $6.9 bln


By Camillus Eboh

ABUJA (Reuters) - High global oil prices and improved output have enabled Nigeria to restore its windfall oil savings to $6.9 billion from close to zero at the start of the year, the finance ministry said on Monday.

Africa's top oil exporter and third biggest economy saves oil revenues above a benchmark price into its excess crude account, a mechanism which is meant to help it weather any commodity price crash or global downturn.

But constant tapping of the account meant the funds had dwindled to just $300 million by the end of last year from $20 billion in early 2007, the start of the current presidential term, raising concern about fiscal discipline.

"The total amount in the excess crude account as of today is $6.9 billion," said Shehu Babayo, director of funds in the office of the accountant general.

"This is due to higher prices of crude oil in the international market and the relative peace in the Niger Delta."

Public spending in Africa's most populous nation has been a particular concern in the run-up to general elections, which started with parliamentary polls on Saturday and continues with a presidential election on April 16 and state votes on April 26.

The country's foreign reserves fell to $33.2 billion by the end of March from $40.7 billion a year earlier and parliament passed a 4.972 trillion naira 2011 budget a month ago, keeping spending at last year's record high levels.

But revenues have been picking up. There was a dip of around 15 percent month-on-month to 615 billion naira in March due to repairs to key export terminals and isolated acts of sabotage on a major pipeline.

The revenues dropped from 722 billion naira in February, acting Accountant General Aderemi Ogunsanya said after a meeting of the Federation Accounts Allocation Committee (FAAC).

"This was as a result of reduced crude oil production and export due to maintenance work on Edom platform at Qua-Iboe, Bonny and Amenam terminals, pipeline sabotage at Brass terminal and multiple attacks on the trans-Niger pipeline," he said.

The FAAC nonetheless distributed 425 billion naira from federal accounts to its three tiers of government for March, up 2.7 percent from the previous month.

The monthly distributions have a major impact on liquidity in sub-Saharan Africa's second-biggest economy and can trigger shifts in bond yields and interbank rates.

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