afrol News, 14 October - Following a plunge in world oil prices prompted by global financial recession, reports from Nigeria say the country has been forced to cut down its expenditure plans for next year.

According to local media, Nigerian government is prepared to trim down benchmark oil price for 2009 budget from current proposed figure of US$62.5 to below US$59 used this year.

"An inter-ministerial committee has begun reworking 2009 budget arising from threat posed by global decline in crude oil prices," a presidential source was quoted as saying today.

It added, "Although committee has not arrived at a final oil benchmark, technical analysis undertaken points to a benchmark lower than used for 2008 budget."

World's eighth biggest oil exporter reportedly saves any oil revenue above benchmark price into an excess crude account, a pillar of International Monetary Fund (IMF)-backed reforms meant to guard against price volatility on world markets and help it to save money.

Media reports show that government would cut out some planned spending, such as purchase of cars and overseas training for civil servants, while some ministries would have no allocations at all in 2009 budget.

Africa's most populous nation's junior finance minister is said to have announced last month that 2009 budget proposal was based on projected oil production of 2.3 million barrels per day at a benchmark price of US$62.5.

Government officials were not immediately available to respond to media reports.

Economists say Nigeria's spending plans are under double strain, not just from falling world oil price, which was around US$83 a barrel on today, compared to highs over US$140 earlier this year, but also from languishing production.

Industry experts agree that west African country is already unlikely to meet its 2.45 million bpd production target in 2008 budget as more than a fifth of output reportedly remains shut down due to militant attacks in Niger Delta and funding shortfalls.

Foreign minister Ojo Maduekwe said yesterday that OPEC member was currently producing just 1.5 million bpd of oil.

Figure was said to be significantly lower than latest public statement given by Oil Minister Odein Ajumogobia, who reportedly said on 24 September that country was producing around 2 million bpd.

By staff writer

© afrol News

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