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Sanusi Shuts Down Lawmakers Crude Benchmark Proposal, Advises on $75

By on October 4, 2012

CBN Governor, Mallam Lamido Sanusi

The Central Bank Governor, Mallam Lamido Sanusi, has faulted the proposal by federal lawmakers to hike the benchmark crude price from $75 to $82.

Sanusi appeared before the House of Representatives Joint Committee on Finance and Legislative Budget/Research yesterday to share his views on the 2013-2015 Medium Term Expenditure Framework and Fiscal Strategy Paper which the lawmakers are deliberating upon.

Sanusi advised the lawmakers not to hike the crude benchmark for the 2013 budget, stating that a higher benchmark did not necessarily mean more revenue.

The CBN governor decried the fact that Nigeria was running a mono-centric economy and advised that the lawmakers find ways to help the Federal Government plug revenue leakages by strengthening agencies like the National Extractive Industries Transparency Initiative (NEITI).

Responding to the question, “Why do we have a problem with increasing the benchmark?”  posed by the Chairman of the House Committee on Finance and Legislative Budget, Mr. Abdulmumini Jibrin, Sanusi answered, “You are talking about oil price and production benchmarks, how do we even know the figures are correct? Does NNPC have a metering system? How do they know how much we produce?

“What access does the Minister of Finance have to validate the figures emanating from the primary source of revenue?

“Until we have metering system, we cannot be too sure about these figures. But we have NEITTI and we need to strengthen it because all these arguments on benchmarks will disappear if we know exactly how much we earn and we are sure that all revenues will go into government’s pockets”.

The governor said Nigeria was employing the highest benchmark amongst other OPEC member countries and stated the illustration of Venezuela which has a benchmark of $30.

Sanusi stated, “Benchmark does not necessarily give you more revenue. You can increase it to $100 if you like, but does that bring money?

“What is important is to increase crude oil production and sales. The $75 is even on a high side relative to other countries. The solution to deficit is not to increase benchmark but to increase the production of crude oil and our OPEC quota.”

The CBN boss also advised the lawmakers to divert their attention to the security challenges in the Niger Delta that is causing the Federal Government billions of dollars in revenue loss.

He said, “Go and stop the stealing of oil in the Niger Delta. We are losing $7bn to oil theft yearly. This fact was stated by the Minister of Finance. So, go and stop the bunkering; go and bomb the illegal refineries.”