Oct 18 (Lagos) - Finance minister laid out a timeframe for the launch of the country's sovereign wealth fund (SWF) today , paving the way for the country to improve the management of often-squandered crude oil earnings.
Former World Bank chief Ngozi Okonjo-Iweala said the SWF would be managed by global auditor and consultancy KPMG, which had already begun recruitment to get a board for the fund in place by mid-December.
"We are proceeding with the implementation of this very important programme following consultations with the Governors' Forum because the feedback we have is the Nigerians strongly support saving for the future and the other core objectives of the fund," Okonjo-Iweala told reporters in the capital.
"It is also clear given the current challenges facing our economy and the global financial crisis, we cannot afford to waste any time."
President Goodluck Jonathan signed a bill into law in May authorising the SWF but political wrangling has caused delays.
The powerful governors of Nigeria's 36 states have expressed doubts about the SWF after meeting with Okonjo-Iweala this month. Some are concerned its implementation will mean there is less oil money allocated at state level.
Okonjo-Iweala said discussions were ongoing with governors and further money would be put into the SWF only after talks with the state heads, meaning more negotiations could still delay the full commitment of oil savings to the fund.
The SWF is meant to replace Nigeria's Excess Crude Account (ECA), a pillar of IMF-backed reforms launched in 2003 into which the OPEC member nation saves any oil revenue above a benchmark price set each year in the budget.
Okonjo-Iweala had announced that the 2012 budget would set the benchmark price at $75 a barrel but she said on Tuesday that this would be reduced to a more prudent $70 a barrel because of volatile oil markets.
Nigeria exports more than 2 million barrels of crude oil a day and brent crude oil prices were $110 a barrel on Tuesday.
Critics of the ECA say there is no clear legal basis on which to determine how the savings in the account should be shared between the tiers of government -- federal, state and local -- leading to constant political wrangling.
An initial $1 billion has been allocated to the SWF from the ECA, which now contains $5 billion, down from $7 billion in April this year, despite high oil prices and production.
The account contained more than $20 billion when late President Umaru Yar'Adua came to power in 2007 but by the end of last year held less than $1 billion as spending was ramped up ahead of nationwide elections.
Nigeria was one of only three OPEC member states not to have a sovereign wealth fund. The government has said the fund will provide a firmer legal basis to ringfence Nigeria's savings.
It has three main aims: saving money for future generations, providing financing for badly-needed infrastructure, and providing a stabilisation fund to defend the economy against commodity price shocks.
reporting for easykobo.com on Tuesday, October 18 2011 from Lagos, Nigeria
Source - as reported by reuters news agency