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S & p expresses concern on fate of 2014 budget in the build up to 2015 election

By The Rainbow
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Standard & Poor's has expressed concern about what would be the fate of Nigeria in the case of major upheaval in crude oil prices or output.

It said that Nigeria's budget for 2014 may overestimate likely oil output amid increased tensions in the country's crude-producing regions in the run-up to 2015 presidential elections.

'It's a concern if they have a big rise in pre-election expenditure and there's a big revision on the oil price or there is a production shortfall due to Niger Delta tensions,' Ravi Bhatia, an analyst at S&P, said from London. 'High global oil prices are helping to sustain the picture as it stands now.'

Nigerian President Goodluck Jonathan's administration is battling rampant oil thefts and unrests in the Niger River Delta, where most crude is pumped. While Jonathan has pledged to keep the budget deficit under control, the central bank is bracing for fiscal 'shocks' ahead of the vote, Governor Lamido Sanusi said in a November interview.

Government spending climbed 17 per cent before the 2011 presidential vote in the West African nation. Jonathan's People's Democratic Party, which has been in power since military rule ended in 1999, may face its sternest electoral challenge next year, after a series of defections to the main opposition coalition.

Nigerian oil production averaged less than 2 million barrels a day last year, according to Bloomberg surveys, compared with the 2.53 million barrels the government had predicted.

The draft budget for 2014, which hasn't been passed by the National Assembly, forecasts 2.39 million barrels a day, a figure Bhatia called 'optimistic.'

The central bank has blamed 'incessant crude-oil thefts' for shortfalls in output. Hundreds of spills occur every year in Africa's top oil producer, with pipeline ruptures caused by corrosion, poor maintenance and equipment failure, as well as by thieves and saboteurs.

Nigeria's proposed budget is also based on an oil price of $77.5 a barrel. West Texas Intermediate crude for February delivery is currently trading at about $93 a barrel