Finance Ministry says 2013 Expected Revenue Falls Short by $12 Billion

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, the Finance Ministry said.
With a 2013 budget based on a daily output of 2.53 million barrels and an oil price of $79 a barrel, the country 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,” Finance Minister Ngozi Okonjo-Iweala said in an interview in Abuja. “You can say theft, but it’s still a quantity shock.”
Nigeria depends on crude exports for about 80 percent of government revenue and 95 percent of export income. The country saves the balance of revenue above the budgeted price in a special account, “designed for these kind of incidents,” according to the minister.
The average price of Nigeria’s light, sweet crude has stayed above $100 a barrel this year. 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.
“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 overall impact on the budget this year is between $6 billion and $12 billion, said Bright Okogu, director of the Budget Office, who sat in on the interview with the finance minister.
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 protests from some states.
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. The account currently holds just below $5 billion, down from about $9 billion at the beginning of the year, according to the Budget Office.

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