Nigerian Budget Deficit and the Crude oil (II)

By sampson Iroabuchi Onwuka

Olusegun Aganga, the Nigerian finance minister, explained that the delay was due to the drop from $80 dollars a barrel to $70 in earnings which forced the hands of the government to withdraw. The explanation is not acceptable since Crude oil prices this year have jumped from 57 dollars a barrel to $70 a barrel and up, before correction. But we are still far from where we started. As such the price effect is already factored in. If there were new facilities in the budget, there was no reason for the delay.

But how this year’s balancing of Nigerian Budget is suddenly central to crude oil auction this August is quite amazing. It seems certain that such plans will go on given the pressure from top and below concerning the budget. Nigerians are however saying that FGN should not under any illusion attempt to patch the hole in the budget with money from this auction. It will only make the problem worse and not better. The Finance minister needs to also explain the very basis of the 500 million dollar bond.

Above all, there is the new issue of ECA ‘Excess Crude Account’ converted to Sovereign Wealth. In the course of the passing the bill, Sanusi preached a ‘quick take off’. The potential damage this could do Nigerian economy has not been discussed. The greater difficulty is raising a bond in international market with USD as bait.

If there is some truth about Remi Babalola comments last week about the bankruptcy status of NNPC, then his claim that NNPC could not pay Nigerian government’s 3.8 billion dollars worth owed to Shell can only question the reason for additional debt from Oil companies and from European banks. To make the issue that clear, Olusegun Aganga and Dora Akunyili, both dismissed the claim, citing that it is NNPC that is owed 1.1 trillion Naira, about 73.3 billion dollars. Olusegun Aganga did not indicate the debtors. I hope we are all on the same page.