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Oil price slump: NSIA rules out withdrawal from SWF

By on March 4, 2015

The federal government is unlikely to make withdrawals from Nigeria’s Sovereign Wealth Fund (SWF), even as the price of crude oil declines.

The Nigeria Sovereign Investment Authority (NSIA), set up in 2012, isn’t yet large enough to make withdrawals worthwhile, the organisation’s Managing Director/Chief Executive, Mr. Uche Orji, said in an interview with Bloomberg Television at the Global Financial Markets Forum in Abu Dhabi. Withdrawals will be an option in future years once the fund is larger, Orji said.

The Nigerian government had proposed cutting the oil-price benchmark to $52 a barrel from $65 a barrel suggested in December as a result of the drop in oil prices. The plan, supported by the Nigerian senate, must be approved by lawmakers in the House of Representatives.

Nigeria relies on oil exports for more than 90 per cent of foreign exchange income and 70 per cent of government revenue. Revenue raised from oil sold for more than the budgeted benchmark is saved in the Excess Crude Account.

The NSIA has around $500 million to invest in Nigeria, Orji said. The fund will focus on allocations to Nigerian power, real estate, agriculture and health care this year, he said.

Orji had last year revealed that it earned N1.2 billion as at the end of the first quarter of 2014 by investing only 20 per cent of the SWF.

The agency had stated that its first quarter 2014 performance was wholly in line with its projections. The agency’s audited net profit for the first quarter 2014 period stood at N1.2 billion. He pointed out that with the changing interest rate landscape in key global markets, the NSIA would be adjusting its asset allocation strategies to take advantage of inherent benefits.

The NSIA has funded three commitments in the infrastructure fund namely: the Nigeria Mortgage Refinancing Company, in which it holds 22.7 per cent stake, fund for agriculture finance and the second Niger Bridge.

 

[ThisDay]