* Nigeria expects to launch second Eurobond next year
* Unclear how much Nigeria will invest in wealth fund
* Finmin says debts comfortable, cbank urges caution
(Adds quotes, details, background)
LONDON, July 30 (Reuters) - Nigeria will announce in August
the management team for its sovereign wealth fund (SWF), which
it expects to launch by the end of this year, the finance
minister told Reuters on Monday.
The government of Africa's biggest crude oil producer may
also issue a second Eurobond of at least $600 million next year
which could be open to members of its diaspora, Ngozi
Okonjo-Iweala said on the sidelines of a conference in London.
The members of the SWF board have been chosen and will be
announced in August once due diligence has been carried out.
"By September/October, we should be getting the team in
place and we should be able to launch by the end of the year,"
she said. "We are in the last stage of due diligence."
The fund will be launched with an initial $1 billion after
the federal government gained approval in June from Nigeria's
state governors, who initially blocked the savings fund, saying
it was unconstitutional.
"We're at a stage now where it's accepted by the governors,"
she said. "The issue is how much goes into the fund not whether
the fund should exist."
The long-awaited fund was supposed to replace the Excess
Crude Account (ECA), in which Nigeria saves oil revenues over a
benchmark price, currently $72 a barrel.
Governors get a portion of any money withdrawn from the ECA
but the SWF won't give those guarantees, which means they are
likely to want most of Nigeria's savings to be kept in the ECA.
The aim of the SWF is to save money for future generations,
to finance infrastructure and to defend the economy against
commodity price shocks.
The ECA can be too easily dipped into by government,
economists say. The account contained more than $20 billion in
2007 but despite years of record high oil prices it now holds
around $6.9 billion.
Okonjo-Iweala is under pressure from fuel importers who say
Nigeria owes them billions of dollars in unpaid fuel import
subsidies. The state oil company NNPC told Reuters last week it
was owed $7 billion in subsidy, more than the entire ECA.
Okonjo-Iweala declined to comment on NNPC's claims.
Nigeria issued a debut $500 million Eurobond
in January last year, which was 2.5 times
Okonjo-Iweala said Nigeria planned to raise at least $600
million next year through a second Eurobond, which may have "a
"We will have a larger bond issue but we may decide that a
portion of that should be directed to the diaspora," she said.
"We have to watch what is happening with the global
markets," said Okonjo-Iweala, who held a non-deal roadshow with
investors in February. "We want to make sure that we float this
at a time when it will be successful."
Okonjo-Iweala said she also wants to reduce domestic
borrowing due to high interest rates in Nigeria and fears of
crowding out the private sector.
The central bank held its benchmark rate at 12 percent
earlier this month and urged the government to curb borrowing
and invest in infrastructure and jobs because signs for the
domestic economy were "ominous".
Okonjo-Iweala said the government would launch a sinking
fund to retire maturing bonds and its goal was to bring domestic
borrowing down to 500 billion naira ($3.11 billion) a year in
the medium term, from 744 billion naira in 2012. However, she
added that the country's overall borrowing was in good shape.
"We probably have one of the lowest debt-to-GDP ratios in
the world today, at about 19 percent of GDP," she said.
"External borrowing is 2.4 percent of GDP. I'm sure that's
probably the closest to zero you can find anywhere in the
Economists agree that Nigeria's borrowing ratio is healthy
but are concerned that during years of record high oil prices,
Africa's second biggest economy isn't saving enough.
Central Bank Governor Lamido Sanusi said last week that
Nigeria no longer had the savings to cushion the economy if
there was a drop in oil prices.
($1 = 160.7000 Nigerian nairas)
(Editing by Ron Askew/Joe Brock)