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Budget: Senate, Reps settle for $77.5 oil benchmark

By BusinessNews Staff on December 19, 2013

Strong indications emerged on Tuesday that the Senate and House of Representatives had agreed on $77.5 as the oil price benchmark for the 2014 budget.

The development came just as the Minister of Finance, Dr. Ngozi Okonjo-Iweala, might present the 2014 budget proposals to a joint session of the National Assembly on Thursday.

The Senate had insisted on $76.5 as the oil benchmark, while the House of Representatives raised it to $79.

The projected average crude oil production for 2014 is 2.4 million barrels per day, while the current price of the ICE Brent, which is close to Nigeria’s Bonny Light, is $108.26 per barrel.

With the $77.5 benchmark, the country will be saving $30.76 on every barrel of crude sold, which will amount to about $73.82m daily for maximum production of 2.4 million barrels.

The situation did not allow President Goodluck Jonathan to present the budget proposals last month because the two chambers failed to agree on the Medium Term Expenditure Framework and the Fiscal Strategy Policy, both are essential instruments for the budget.

The Senate at its plenary on Tuesday held a one-hour closed door executive session on the issue.

One of the senators, who attended the meeting but craved anonymity, said, “The two chambers eventually settled for $77.5 as a middle ground approach.

“While the Senate agreed to settle for the new benchmark, members of the House of Representative were persuaded to accept the $77.5 offer.

“It is a give and take thing. We at the Senate, in the interest of peace and to ensure the presentation of the budget proposals, upped the benchmark from the initial $76.5 proposed.

“Our colleagues from the House of Representatives have been persuaded to reason with us and come down from the high pedestal and accept $77.5 as a reasonable oil benchmark.”

Our correspondent further gathered that Okonjo-Iweala might present the 2014 budget before the National Assembly on Thursday.

The Senate spokesman, Eyinnaya Abaribe, had while briefing journalists earlier on Tuesday said the close-door session was necessitated by the differences between the Senate and the House of Representatives over the benchmark.

He also said the upper legislative body would reconvene later in the day to hopefully, resolve all the grey areas surrounding the oil benchmark.

Abaribe said, “Because of the MTEF/PSF meeting that was adjourned sine dine last week due to the differences between the Senate and the House of Representatives with regard to the benchmark, we will reconvene at 3pm today (Tuesday) and hopefully, we will resolve the matter.

“Of course, the resolution of the matter also means the country will be in a position to receive the budget from Mr President. This is what I can confirm.”

[Punch]

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