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Cablegate: Nigeria Adjusting Oil Reference Price in 2008

VZCZCXRO5794
RR RUEHMA RUEHPA
DE RUEHUJA #2177 2831453
ZNR UUUUU ZZH
R 101453Z OCT 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC 1170
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHOS/AMCONSUL LAGOS 8058
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS ABUJA 002177

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT PASS TO USTR LAGAMA
TREASURY FOR RICHARD HALL/DAN PETERS
USDOC FOR 3317/ITA/OA/KBURRESS AND
3130/USFCS/OIO/ANESA/DHARRIS

E.O. 12958: N/A
TAGS: EFIN EPET ECON PGOV PREL NI
SUBJECT: NIGERIA ADJUSTING OIL REFERENCE PRICE IN 2008
BUDGET

REF: A. ABUJA 01954

B. ABUJA 01973

SENSITIVE BUT UNCLASSIFIED -- PLEASE HANDLE ACCORDINGLY.

1. (SBU) The GON has announced that it plans to use an oil
reference price of USD 53.8 per barrel in the upcoming 2008
Budget for allocations to the Excess Crude Account (ECA).
The upcoming budget will make more conservative assumptions
regarding oil production to take into account supply
disruptions in the Niger Delta. The GON's goal is to ensure
adequate support for government expenditures while
contributing to the ECA. The Finance Minister has admitted
that Nigeria's ECA is "Extra-Constitutional." Nonetheless,
for the moment state governors are not actively challenging
the ECA contributions (which otherwise would go in part to
them).

2. (SBU) The Central Bank of Nigeria announced October 2 that
foreign currency reserves had reached USD 46.7 billion. The
CBN considers that level of reserves adequate for up to 25
months of imports. Using a different set of measures for oil
industry-related imports, the IMF considers Nigeria's
reserves adequate for 13 months. Both IMF Rep and World Bank
Country Director told Econcouns that they consider the
current pace of reserves accumulation to be healthy and on
track.
PIASCIK

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