Nigeria Proposes Cutting Oil Price Benchmark to $52 a Barrel

Nigeria’s Senate and executive proposed cutting this year’s budgeted oil price benchmark to $52 per barrel from $65 suggested in December, as falling prices erode the income of Africa’s biggest crude producer.

Nigeria’s finance ministry said an agreement had been made with the Senate and most members of the House of Representatives, though the lower chamber has yet to approve.

“The proposal is $52 a barrel for 2015 due largely to decline in crude oil prices,” Enyinnaya Abaribe, chairman of the Senate Committee on Information and Media, said by phone on Wednesday. The new benchmark was agreed with Finance Minister Ngozi Okonjo-Iweala, he said from the capital, Abuja.

Africa’s biggest economy and most populous country has been hit by Brent crude prices almost halving since June and as it prepares for presidential elections that were postponed to March 28 on security concerns. The oil slump diminished the government’s income by 15 percent in January compared to the previous month.

Parliament is seeking to get the budget approved before the national vote next month, Paul Nwabuikwu, an Abuja-based spokesman for the finance ministry, said by phone.

Nigeria relies on oil exports for more than 90 percent of foreign exchange income and 70 percent of government revenue. The price of Brent crude, which serves as a reference for Nigerian oil, has averaged $55.01 a barrel this year, according to data compiled by Bloomberg.

The new proposal “will give the country a clearer picture of government revenue projection and allow for a budget that is in line with current crude oil market realities,” analysts at Ecobank Transnational Inc. said in an e-mailed note.

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