By Omoh Gabriel
The amount saved from oil windfall in the country‚Äôs excess crude revenue account has been depleted and what is left will not tide the country over any financial down turn should oil price fall below the budget bench mark of $62 per barrel. Disclosing this yesterday at a press briefing in Washington on Sunday, the leader of the Nigerian delegation to the IMF/World Bank meeting Professor Chukwuma Soludo CBN Governor said that the current financial and economic crisis portend some financial challenges for Nigeria as the prices of oil are on the downward trend.
According to him much of the savings in the Excess crude account has been disbursed and what is left based on what the three tiers of government in the country agreed on will not be enough to make any significant impact on the budget if the prices of oil falls below the budget bench mark. The CBN governor who was flanked by the accountant general of the federation Mallam Dankwabo said that the federation account committee agreed that N1trillion be set as the base for the savings and what ever is earned as excess revenue in any particular that is above the one trillion mark 80 per cent should be shared among the three tiers of government why 20 per cent is saved.
He disclosed that out of what was saved the three tiers of government have agreed that the sum of $5.6billion is to be spent on power stressing that with the drop in the production level which has resulted in the drop of crude export as a result of the activities of the militants in the Niger Delta, part of the savings have been used to supplement the revenue allocation to the three tiers of government in months when available revenue falls short of the budget provision.
In the month of September for instance the sum of N31.4 billion was taken from the excess crude account to augment the budgetary shortfall for the month. The budgetary shortfall was due basically to the shut-ins and vandalisation of pipelines which had adverse effect on the volume of production. The essence of augmentation is to enable the three tiers of government to continue with their projects despite price fluctuations or reduction in the volume of production. The amount of money that is allocated to each state is standardized the highest recipients in the second disbursement for Augmentation during the meeting of the Federation Account in September 2008 are Rivers State N1.8bn, Akwa Ibom N1.3bn, Delta N932mn, Bayelsa N853mn and Ondo N551mn. Other recipients are Lagos receives N477mn, Kano N635mn, Katsina N473mn and Oyo State gets N456mn.
He said it is frightening as there are several forecast of the level oil prices might drop to which portend danger for the Nigeria economy. Vanguard had reported exclusively that three weeks ago that studies has shown that oil prices will drop to $50 per barrel. If that happens the 2009 budget being predicated on $62 per barrel will fall short of budget expectation by $12 a barrel.
Soludo said ‚ÄúBut more fundamentally, almost every body will be affected one way or the other. So far as you have trade links commodity prices are going to fall because of declining demand in the major markets, and with the fall in commodity prices we have already seen a 40 per cent fall in crude oil prices. It is almost at $80 and if you will recall we went above $120. Other commodity prices copper, cocoa are going to be affected as the global demand falters‚Äù.
He said one of the issue being discussed at the ongoing Annual meeting is climate change which in the long run is going to have a far reaching implication for the country. He said the focus of the world now is how to save the environment which has led to the search for alternative to fossil fuel. With high oil prices the search for alternative has been intensified and has become a major campaign issue in the US election. Obama he said has promised to invest $10billion a year for over a period of 10years for research for alternative to oil. This he said has very far reaching implication for Nigeria which main stay is oil