Hope for Nigeria as oil now is $78 per barrel

By Omoh Gabriel

CRUDE oil prices steadied at a one-year high above $78 a barrel weekend after U.S. industrial production grew in September, boosting optimism for an economic recovery and providing a boost for Nigeria’s 2009 balance of payment position.

Oil prices held gains of more than 10 per cent or $8 a barrel, accumulated over a seven-day rally.

Oil investors shrugged off factors that typically put pressure on prices, including a dip in U.S. stocks that followed disappointing earnings from General Electric (GE, Fortune 500), and a stronger dollar.

The U.S. currency’s recent plunge to a 14-month low against a basket of other currencies helped oil to rise over the last week. The currency gained Friday, although it lost some of its earlier strength in afternoon trade.

In another development, the Central Bank of Nigeria (CBN), weekend released $2 billion (N300bn), from the excess crude account into the various accounts of the three tiers of government based on the federation account sharing formula, barely three days after the Federation Account Allocation Committee (FAAC) met.

FAAC had during its meeting on Tuesday, October 13 approved the recommendation of the National Economic Council (NEC) to share $2bn from the foreign Excess Crude Proceeds Account to stimulate the economic fortune of the nation.

The three tiers of government had also in August shared $2.bn from the excess crude proceeds account and when added to the current $2bn, it represents two per cent of the entire Gross Domestic Product (GDP) of the country.

The Minister of State for Finance and FAAC Chairman, Mr. Remi Babalola, who confirmed this development to newsmen on Sunday in Abuja, added that CBN also paid on Friday N350.721bn to the federal, state and local governments.

The amount is the total of each tier of government’s share of the statutory allocation, value added tax and budget augmentation for last month.