Senate wants oil price benchmark lowered in 2015 Budget

by Godwin Akanfe

The Senate Finance Committee proposed on Wednesday, February 25, the cutting of the oil price benchmark in the 2015 Budget to $52 a barrel from its current $65, a source at parliament said.

The finance ministry had previously said that the benchmark would not change. With an election coming up on March 28, President Goodluck Jonathan’s administration is under pressure not to slash spending, especially on salaries.

The source told Reuters the upper house had debated the change proposed by the committee on Wednesday but had not yet reached a conclusion.

“It’s going to have to be lowered,” the source said. “The Senate is likely to agree this is the only way to go.”

The oil-price slump has hammered Nigeria, whose currency has hit a series of record lows against the dollar in the last three months, breaking through 200 to the greenback this month, despite the central bank burning through billions of dollars of reserves to prop it up.

GDP growth, only 15 percent of which is fed by oil, remains robust even though revised down from forecasts, showing 5.94 percent in the fourth quarter of 2014.

But Nigeria’s public finances have been hit by a sharp drop in world oil prices and irregular supply linked to pipeline vandalism. The government depends on oil for around 80 percent of revenues.

Nigeria’s gross government revenue fell 15 percent to 416 billion naira ($2.07 billion) in January due to weaker oil prices, the accountant general said on Wednesday.

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