By Omoh Gabriel Business Editor in Washington D.C
The Minister of Finance and Coordinating Minister of Economy Dr. Ngozi Okonzo-Iweala said in Washington that the ability of government to finance the 2013 budget has came under threat as Nigeria was losing N160billion ($1billion) a month in revenue following the drop in oil production and the falling the prices of crude oil at the international market. Oil price has dropped to close to the $79 per barrel budget bench mark and could even drop further. Total losses, which stemmed from shut-in due to Force Majeure declared by oil companies, oil theft and illegal bunkering, was put at 300,000 barrels per day (bpd) by the Finance Minister and Coordinating Minister of the economy, Dr Ngozi Okonjo-iweala.
Addressing an emergency press conference at the on-going World Bank/ International Monetary Fund (IMF) meetings in Washington D.C, the minister said the briefing was important because of the avowed transparency in the President Jonathan’s administration.
The Nigerian National Petroleum Corporation (NNPC) had said last Tuesday said that oil production fell below projections in the first quarter due to crude theft and pipeline sabotage. The current production according to Finance Minster, ranged from 2.1 million bpd to 2.2 million barrels per day, less than an estimated 2.5 million barrels per day for the 2013 budget.
The N4.93 trillion ($31.35 billion) budget for 2013 was based on an assumption of a $79-per-barrel budget oil price, higher than the $75-per-barrel proposed by the Executive and up from $72 for last year’s budget.
With the persistent drop in price of oil in the international market ($97 dollar per barrel as at Thursday coupled with the monthly N160billion revenue loss, in addition to the shortfalls in other revenues from the Federal Inland Revenue Service (FIRS) and Nigerian Customs, the ability to finance the 2013 budget may be tough if oil production is not restored in good time especially the Shell Nembe, which has shut-in 150,000 barrels of oil per day.
But the Minster has assured that the $7billion left in the Excess Crude Account (ECA) was enough to stabilize the shortfall within the next three months pending the time the recoveries would be made.
She said this is why the Excess Crude Account (ECA) is very important to the country but pointed out that it was very significant for the country to move quickly to recover production.
She said: “In terms of the impact both on the NNPC side, price drop, the customs collection and FIRS, we are experiencing an impact. However, the greatest impact is from the oil sector. The excess crude account is not meant to be a permanent thing but meant to be a fiscal policy instrument in any country not just in Nigeria but any country that has a natural resources base.
“ it is very useful in cushioning the impact of external shock we are talking about. Nigeria simply has to diversify its revenue base. This administration has made it crystal clear, that is why it is focusing on agriculture. That is why we are supporting all the reforms being carried out in all the sectors, not just to create jobs but to diversify our revenue base.
“Our drive in the ministry of finance is to increase collection in taxes not just from corporate but all sectors, there is a lot of room to improve in corporate tax collection, that is why the Federal Inland Revenue service and some consultants are looking at the ways to improve corporate tax administration, FIRS has improved its collection effects but it can be better. In the next four months we will be doing on tax drive to improve tax collection.’
She assured that the Shell Nembe pipeline will soon be restored.
Nigeria depends on crude exports for 80 per cent of government revenue and 95 per cent of its export income. The nation’s foreign exchange reserves have climbed 10 per cent this year to $48.7 billion as at April 16, according to Central Bank of Nigeria (CBN) data published on its website.
