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2005 budget to be based on
$27, says Obasanjo
By Chuks Isiwu and
Adetutu
Folasade-Koyi
President Olusegun Obasanjo
has insisted that the Federal Government would retain the $27 per barrel
benchmark for the 2005 budget.
This view was corroborated by
Presidential Adviser on Petroleum and Energy, Dr Edmund Daukoru, who also
said the official price range for oil next year would be between $30 to
$40 per barrel.
Daukoru disclosed this at the
just concluded 133rd conference of the Organisation of Petroleum Exporting
Countries (OPEC) in Cairo, Egypt. He said that though situations change,
if the bottom of the pricing is anywhere between $30 and $40, it would be
acceptable to Nigeria.
Obasanjo in a private
correspondence to Senate President, Adolphus Wabara, added that N148
billion, being 50 percent of the deficit will be financed from the oil
revenue saved this year while the remaining N171 billion would be financed
from the privatisation proceeds.
In the letter which was read
at Tuesday�s plenary session, Obasanjo said he has �elected to retain the
oil price of $27 per barrel and strongly that we stay at this price
because the oil market remains very volatile as evidenced by the six
dollar drop in price last week during less than 24 hours of trading. It is
our assessment that there is an important fiscal risk that would be
attributable to raising the price above this level�.
On deficit financing, Obasanjo
said: �I plan to finance the deficit of N319 billion by drawing N148
billion (50 percent) out of the oil revenue saved in 2004 and the balance
of N171 billion will be financed from the proceeds of asset sales and
concessioning.�
The President called for a
timely passage of the 2005 Appropriation Bill saying that although
government�s privatisation has not yielded the desired result, he
expressed hope that NITEL and ALSCON would be privatised by the first and
second quarters of next year.
Daukoru at the Cairo meeting
also made reference to the precaution that went into the making of this
year�s budget when he told reporters that in spite of the 120,000 barrels
per day cut in the nation�s production, the revenue expectations for the
year remained unaffected.
�The cut will not affect this
year�s revenue expectation because the budget was cautious enough, so that
in spite of the market swings, the nation�s budgeted earnings won�t be
affected,� he said.
The need for precaution in
projecting prices for next year is highlighted by the fact that OPEC
itself is anticipating that in the second quarter of next year, prices
will come under pressure when demand is also expected to take a plunge due
to product build up by consumers in the period.
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