Nigeria slashes 2015 budget oil benchmark price
The Nigerian Federal government yesterday again resubmitted the 2015-2017 Medium Term Expenditure Framework (MTEF) with a revised oil benchmark of $65 a barrel, effectively slashing next year’s budget by another 12 per cent, in the face of dwindling oil prices.
Oil prices have fallen more than 30 per cent since June, although Light Brent crude rose 44 cents to $70.98 a barrel in yesterday’s trading, while the US’ West Texas Intermediate (WTI) rose by 67 cents to $67.55 a barrel.
The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala said: “The agencies have been given targets as part of measures to boost revenue for the economy. They have been mandated to deliver 25 per cent of their gross revenues to the Consolidated Revenue Fund as opposed to the past practice of their net revenue.”
The Nigerian oil minister, Allison-Madueke, who addressed State House correspondents for the first time since her election as OPEC President last week, said the change of direction was necessary to enable Nigeria stay competitive in the dwindling international crude oil market.
She warned that in order to stay afloat, Nigeria could no longer afford to do business as usual considering the prevailing decline in global demand for the product.
She said, According to media reports:
“Nigeria has to become much more competitive at this time and going into the future. We cannot continue to do business as usual.
“We must ensure that we have the right enabling parameters and indices in this country to attract the right end-user markets and end-user demands for our products. “This is because there are so many other countries that would be competing for those end user markets and to get that end user demand.
“So, we will have to sit down and re-formulate our entire approach over the next month or so. In fact, it should be immediately to ensure that we are at the cutting edge of competitiveness.
“We need to make ourselves competitive in the market, and we are able to garner and take those end user markets.”
Oil prices had tumbled by about $2 on Tuesday after Iraq announced plans to boost the country’s crude oil exports after striking a deal with the autonomous Kurdish region.
Fracking has doubled production in the US since 2008, to over nine million barrels a day, flooding the global market. OPEC’s share of world production has fallen to 40%, and its ability to control prices has more or less faded.