Revenue earned by Nigeria this
year may be as much as $12 billion
short of budget estimates as theft
of crude and output disruptions
persist in the oil-rich Niger River
delta, Finance Minister Ngozi
Okonjo-Iweala said. The
government will draw down its oil
savings in the Excess Crude
Account to compensate for the
drop in revenue to keep the budget
deficit under control, Okonjo-
Iweala said in an interview with
Bloomberg in Abuja.
Savings in the special crude account
have dropped by half as President
Goodluck Jonathan’s government
tries to make up for the drop in oil
revenue and fund a deficit that has
reached 2.5 percent, according to
the central bank. With a 2013
budget based on a daily output of
2.53 million barrels and an oil price
of $79 a barrel, Nigeria expected
revenue of almost $80 billion from
exports. In the first half of the
year, oil receipts amounted to $
28.2 billion, more than $7 billion
below the estimate, according to
central bank figures.
“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 depends on crude exports
for about 80 per cent of
government revenue and 95 percent
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 rebels 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 sat in on the interview
with the finance minister. The
government saves the balance of oil
revenue above the budgeted price
in the Excess Crude Account, which
had a balance of just under $5
billion, down from about $9 billion
at the beginning of the year,
according to the minister. Nigeria’s
vulnerability to shocks is
heightened because of lower
government revenue from oil,
putting pressure on the currency,
central bank Governor Lamido
Sanusi said in an interview in Oslo.
“The great challenge now is that
the fiscal buffers are not as strong
as they would be because of the
revenue shortfall,” Sanusi said. “If
there are any adverse external
developments that would feed into
this weak revenue profile and put
pressure on exchange rates.”
The central bank draws down its
foreign-currency reserves to sell
dollars at twice-weekly auctions to
keep the naira within a band of 3
percent around 155 per dollar. The
naira gained 0.2 percent to 158.73
against the dollar on the interbank
market as of 2:09 p.m. in Lagos, the
commercial capital. “This increases
the pressure on the external
balance which means the external
reserves and exchange rate will be
under pressure,” Bismarck Rewane,
chief executive officer at Financial
Derivatives Co., said by phone from
Lagos today. “Once the external
balance is under pressure, there is
an underlying threat that will
manifest in speculative attack
against the currency.”
Okonjo-Iweala is seeking to meet a
budget deficit target of 1.9
percent of gross domestic product
this year. The shortfall reached 2.5
percent in the second quarter
during the peak of the output
outages, according to data from the
central bank. President Goodluck
Jonathan is due to present his 2014
budget to lawmakers on Nov. 12.
”When there’s a breakage the
impact is that the pipes are shut
down, the effect is that 400,000
barrels are shut down,” Okonjo-
Iweala said. “The actual theft is
like 70 to 80,000 barrels a day.”
The average price of Nigeria’s light,
sweet crude has stayed above $100
a barrel this year. The official
selling price of Nigeria’s benchmark
Qua Iboe crude for November
loading was set at $3.50 a barrel
more than dated Brent, the
European benchmark, according to
state-run Nigerian National
Petroleum Corp. Dated Brent was
priced at $108.92 a barrel at 9:18
a.m. in London. Income earned by
Nigeria from crude exports, taxes
and other sources are shared
among the three tiers of
government, including the federal,
36 state governments and 774 local
councils. At allocation meetings in
August and September, funds
received were not enough to meet
expected allocations, prompting
complaints from some state
officials. The disputes over
allocations “are over,” Okonjo-
Iweala said. “Everybody realizes
that we have to allocate what
comes into the coffers.”

dridowu: [b]Criminal gangs
tapping oil from pipelines for illegal
sale [/b]have posed the biggest threat
to output since a government
amnesty in 2009 reduced armed
attacks led by rebels fighting for
greater control of the region’s
resources.
”

Nigeria is sitting on a keg of gunpowder. The massive oil theft continues unabated. The theft has also become unprecedented under President Jonathan in spite in increasing cost on security.

Also the clannish, tribalistic or 'PPP' employees who come here say that the 'oil belongs to us' should realize that it is not in anyone's interest for these criminal gangs, who have so garnered so much cash, to take over their affairs or the country.

Think about the amount involved: $12billion is close to N2trillion!!!

Hmmmm, hope some parts of the country or the country itself won't end up in the hands of criminal gangs. God forbid!