President Umaru Yar'adua will tomorrow receive a draft of the 2009 budget which cuts back expected revenues because of falling oil prices, Media Assistant to the Finance Minister said yesterday.

Malam Sani Zorro said the oil benchmark for the budget earlier set at $62.5 per barrel will be slashed because of the persistent fall of the oil prices at the international markets.

He said Finance Minister Shamsuddeen Usman will present the draft budget at the Federal Executive Council (FEC) meeting. The Organisation of Petroleum Exporting Countries (OPEC) yesterday said the price of crude oil fell by $12.03 to $77.98 a barrel last week, from $90.01 a barrel a week earlier.

Oil prices surged earlier in the year to $140 per barrel. But prices have seen steep falls in the past weeks.

Zorro did not mention the new oil benchmark, but a source said it would be below $59 per barrel on which this year's budget has been placed.

"The earlier proposed benchmark will be cut down because of the fall of the oil prices at the international markets," he said.

The 2008 budget which Yar'adua sent to the National Assembly for amendment is yet to be finalised.

A source said that the 2009 budget is to be based on a daily crude oil production of 2.3 million barrels per day, as against 2.45 million barrels per day for the 2008 budget.

Nigeria's oil production has suffered disruptions because of militant activities in the Niger Delta.

According to a source, an Inter-ministerial Committee is re-working the 2009 budget proposals because of the threat posed by the global decline in crude oil prices.

"Although the committee has not arrived at a final oil benchmark, technical analysis undertaken points to oil benchmark lower than the 2008 budget.

The government is cutting down on recurrent, overheads and capital expenditures in next year's budget in a bid to prudently manage resources as well as ensure quality expenditure," the source said.

There may be no allocation for the purchase of cars and overseas training in the 2009 budget to block leakages and frivolous expenditure by MDAs, the source said.

"The 2009 Budget is a clear departure from the past because some federal ministries, departments and agencies (MDAs) will not receive any capital allocation. It will focus mainly on the seven point agenda of the present administration and also include provisions for River Niger dredging and second Niger Bridge," said the source.

Also from next year, there would be benchmarks and quarterly performance assessments for Ministries, Departments and Agencies (MDAs), to ensure budget implementation, the source said.

Meanwhile, OPEC said yesterday that the 13 members' cartel pumped an average 32.47 million barrels per day (b/d) of crude oil in September. This is down 330,000 barrels per day from August and reflects output declines in Saudi Arabia, Iraq and Angola.

Excluding Iraq, the 12 members bound by production agreements produced an average 30.18 million b/d, the survey showed. This is 230,000 b/d less than the August output of 30.41 million b/d and exceeds the so-called OPEC-12 output target of 29.673 million b/d by 507,000 b/d.

"At Platts, we are seeing increasing signs of crude and products going unsold on the market," said Platts Global Director of Oil John Kingston. "This means that from an OPEC perspective, the cuts we estimate for September may not be coming fast enough to keep the market in balance. OPEC's upcoming meeting is in November, and the conditions we face today could be radically different by then."

Saudi Arabia accounted for the biggest single fall, 170,000 b/d. Iraqi volumes dropped by 110,000 b/d and Angolan volumes by 100,000 b/d.

Other smaller dips came from Iran, whose output fell by 20,000 b/d to 3.98 million b/d, and from Ecuador, whose production eased by 10,000 b/d to 500,000 b/d.

Reductions totaling 410,000 b/d were partially offset by increases of 50,000 b/d from Libya, whose output recovered to around 1.7 million b/d, and 20,000 b/d from Kuwait.