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Budget: Reps propose $54 oil benchmark

By on March 7, 2015

The House of Representatives on Thursday proposed that the crude oil benchmark for the 2015 budget should be $54, down from the $65 originally proposed by President Goodluck Jonathan.

The Senate, which last week approved the 2015-2017 Medium Term Expenditure Framework and Fiscal Strategy Paper, had settled for $52 as the oil price benchmark.

There were indications on Thursday that both chambers might likely pass the budget itself next week after harmonising their positions on the oil benchmark price.

The House members took the decision on Thursday as they considered and approved the MTEF. The approval of the MTEF is a mandatory requirement preceding the passage of the N4.3tn budget estimates by the National Assembly.

In slashing the benchmark, the House adopted the position of its Joint Committees on Appropriation, Finance, Aids/Loans and Debt Management, which advised against the $65 proposed by the executive.

The report of the committees indicated that the $65 was not sustainable in the face of falling crude oil prices globally.

However, the House retained the oil production projection of 2.278 million barrels per day for 2015; 2.327mbpd for 2016; and 2.406mbpd for 2017 as proposed by the executive.

While raising the projected non-oil revenue for the 2015 budget from N3.5tn to N4tn, the lawmakers cut the total recurrent proposal from N2.6tn to N2.5tn.

On the capital side, the House raised the proposed expenditure from N633.53bn to N700.78bn.

Statutory transfers also dropped from N411.85bn to N368.27bn.

But a decision of the House that is likely to generate tension between the lawmakers and the Presidency is the scrapping of the Service Wide Vote, where the government has set aside N360.94bn to spend this year.

The existence of the SWV has generated controversies lately, as the House complains of not knowing how the vote is utilised.

Just last week, the House Committee on Public Accounts reported that only the President, the Minister of Finance, Dr. Ngozi Okonjo-Iweala; and the Director-General of the Budget Office, Dr. Bright Okogu, had access to the account.

Acting on the report of the joint committees, the House relied on the findings of the PAC, which is headed by Mr. Solomon Olamilekan.

“The SWV is operated by only three people; Jonathan, the Finance minister and the DG, Budget Office,” Olamilekan had stated.

Speaking on the report, the Chairman, House Committee on Legislative Budget and Research, Mr. Opeyemi Bamidele, told members to stick to the recommendations of the committees and not allow themselves to be “boxed into a corner” by the executive.

On how the $54 benchmark price was arrived at, Bamidele explained that a research conducted by his committee found out that some oil-producing countries with better micro-economic performance than Nigeria had settled for $60.

He said, “Saudi Arabia, Iraq and Venezuela are doing better than Nigeria. They passed their 2015 budgets long before the fall in oil prices. Yet, they looked into the future and decided to peg their benchmark at $60.

“The adoption of $54 is to ensure micro-economic stability for the country.”

For the official exchange rate, the House approved N198 to the United States dollar as against the N165 proposed by the executive.

Similarly, the funding of the Subsidy Reinvestment and Empowerment Programme was reduced from N102.50bn to N21bn”due to the fall in the price of crude.”

Lawmakers asked that the details of the SURE-P projects to be executed should be attached to its annual budget estimates for approval by the National Assembly.

Meanwhile, the Presidential Amnesty Programmes for ex-militants in the Niger Delta will gulp N63.2bn this year.

Out of the figure, N58bn will be spent on the welfare of the ex-militants, with N34.5bn earmarked for the payment of stipends/allowances and N23.5bn for the reintegration of the ex-militants who have received training.

The Special Adviser to the President on Amnesty, Mr. Kingsley Kuku, gave the figures on Thursday at a separate budget defence session with the House Committee on the Niger Delta.

He told the committee, which is chaired by Mr. Warman Ogoriba, that the balance of N5.1bn was for the “operations” of the amnesty office.

The committee did not ask Kuku any questions, as he simply read out the budget estimates to members before the session came to a close.

 

[Punch]