The Federal Government has said it will create a revenue-reserve fund to protect the country against the volatility in international crude prices.
�The establishment of such a fund will turn oil from a curse to a blessing,� the Minister of Finance, Dr. Shamsudeen Usman, told journalists in Abuja on Thursday.
He did not provide further details on the proposed fund.
It is not clear whether the oil fund being proposed will be operated differently from the current Petroleum Support Fund, which was created by the former President Olusegun Obasanjo, to also cushion the volatility of high oil prices.
The PSF among others was aimed at stabilising the domestic prices of petroleum products, in such a way that oil marketers could recoup their investments without resorting to pump price increases.
Already, the PSF, according to its managers, Petroleum Products Pricing Regulatory Agency, has incurred more than N79.05bn worth of claims as at the end of June 2007.
A total of N100bn was budgeted for the operations of the PSF in 2007.
A summary of claims released by the Executive Secretary, PPPRA, Dr. Oluwole Olulweye, on the operations of PSF in the first half of 2007, showed that the Nigerian National Petroleum Corporation alone was paid N70.27bn out of the N73.97bn paid by the PPPRA so far to oil marketers.
The report put Oando Plc on top of the claims chart with over N1.53bn. Others include Total Nigeria Plc N1.36bn; NIPCO Plc N397.84m, African Petroleum Plc N213.26m; and MRS Oil and Gas N203.6m.
There was an outstanding sum of N5.08bn owed MRS, Oando, AP and NIPCO, carried forward from the 2006 operations.
The PSF became operational in January 2006, during which the sum of N150bn was voted for the operations of the fund, but at the end of the year, more than N261.11bn was expended on claims by oil marketers, including the NNPC.
Due to what the PPPRA described as �high volatility in petroleum products prices in the 3rd quarter of 2006,� the amount was increased by N100bn in a supplementary budget, making a total of N250bn voted for PSF operations.
Notwithstanding budgetary provisions, Oluleye said, �The PPPRA is taking N300bn from the Federation Account on a yearly basis for subsidy.�
Recently issues were raised regarding the actual sum paid to the PPPRA for PSF operations, in which the Revenue Mobilisation and Fiscal Commission claimed it actually allocated a total of N304.283bn to the PPPRA between October 2005 and February 2007.
The PPPRA boss, however clarified, �The PSF is funded strictly based on appropriation by the National Assembly and when additional amounts are required, the executive arm of government is so informed.�
He also noted that the implementation of the fund was based on approved guidelines, while the Central bank of Nigeria is the custodian of the fund.
According to him, �The PPPRA verifies the claims by petroleum products importers in conjunction with the appointed auditors by the Federal Ministry of Finance.�
Marketers had complained about the process of operating the fund, which subjected their claims to multiple audits, thereby delaying payments.
The development had caused scarcity of products early in the year, as marketers refused to import more products until they had been paid.
Nigeria based its 2006 budget on a fixed oil price of $35 a barrel, to help shelter against shocks such as violence in the Niger Delta, where most of the nation�s oil is produced. Earnings above that amount went into an excess-proceeds account, withdrawals from which must be approved by the National Assembly.
The International Monetary Fund on June 28, urged Nigeria to review its policy for drawing from its so-called excess crude account, raising questions about how the nation was spending its surplus revenue.
The announcement comes after President Umaru Yar�Adua, said on July 3 that government planned to overhaul oil-revenue management in Nigeria.
The Finance Ministry will also work with other government departments and agencies to sustain the pace of economic reforms in the West African nation, Usman said today.
Nigeria is the region�s second-largest economy after South Africa and the continent�s most populous country.