Ijeoma Agudosi/Chinedu Byron Izuora/Agency Report
Nigeria’s finance ministry said it isn’t reviewing its benchmark budgeted oil price after a Ministry of Power official said the nation plans to review it downwards.
“The price of oil is still quite volatile and we do not know how it will bottom out,” Constance Ikokwu, a spokeswoman at the Ministry of Finance, said today in Abuja. “We have been working together with our lawmakers to ensure that we steer the country in the right direction during this period.”
Finance Minister Ngozi Okonjo-Iweala last month proposed cutting this year’s budget by 8 percent and reduced its benchmark oil price to $65 a barrel from last year’s $77.50 a barrel in the face of tumbling crude prices. Lawmakers in Africa’s biggest economy are considering the proposals ahead of presidential elections on Feb. 14.
Earlier on today, Godknows Igali, permanent secretary at the nation’s Ministry of Power, said at a conference in Abu Dhabi the government plans to further revise downwards the budgeted oil price to below $50 a barrel.
Igali said later by phone that he misspoke about the plan to revise the estimated oil price to below $50 and said the finance ministry is discussing the price to be used in the budget.
He said Nigeria can sustain crude prices at $50 a barrel for about five years, and the government will complete the budget in a “couple more weeks,” Igali told reporters.
Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, is probably assuming $80 oil in its 2015 budget, according to John Sfakianakis, a former Saudi government economic adviser. Iraq, OPEC’s second-biggest producer, is using $60, Iran’s draft budget is assuming $40 and Kuwait has proposed basing its 2015-16 budget on $45 oil.
Prices of Brent crude, a benchmark for more than half the world’s oil, have dropped 54 percent in the past year, forcing governments to reduce subsidies on diesel, natural gas and utilities and companies to cut billions from capital budgets. Qatar Petroleum and Royal Dutch Shell Plc called off plans to build a $6.5 billion petrochemical plant this month because it was “commercially unfeasible” in the current energy market.