Senate seeks crude oil benchmark review

By The Citizen

The Senate has described the N4.357trn 2015 budget proposal submitted to it by President Goodluck Jonathan as unrealistic in view of its faulty projections.

The lawmakers, who began debate on the budget proposal yesterday were of the collective view that the indices, including crude oil benchmark, exchange rate of the Naira to other international currencies, the crude oil production quota, etc. upon which the budget was predicated were unrealistic.

Despite their criticism however, the budget scaled second reading and was committed to the Finance Committee for further legislative work with a mandate to return the document back in four weeks.

This was also as the lawmakers commenced a one month break, just two days after they resumed from their Christmas and New Year holidays.

Even though there was no explanation as to the reason for the break, it was gathered that it was to enable the lawmakers prosecute the February Presidential and National Assembly elections.

Leader of the Senate, Victor Ndoma-Egba, who sponsored the debate on the budget explained that the essence of the bill was for the lawmakers to authorise the issue from the Consolidated Revenue Fund of the Federation, N4.357trn as against the 2014 budget of N4.6trn.

A breakdown of the budget proposal according to the Leader showed that N411,840,000.00 was for statutory transfers, N943,000,000.00 was for debt services, N2,616,426,233 for recurrent non debt expenditure and N387,112,573,767 was for capital expenditure.

The revised projected crude oil benchmark, according to Ndoma-Egba was $65 per barrel, projected oil production was put at 2.2782 million barrels per day (mbpd) and exchange rate of N165 to the U.S. Dollar.

Chairman of the senate committee on finance, Senator Ahmed Makarfi in his contribution to the debate, called for caution, stressing that the crude oil bench mark of $65 and the N165 exchange rate to the U.S. Dollars were not realistic.

He noted that the projections in the budget were not in tune with the current realities.

He also stated that the budget was not an expansionist budget, but an austerity and belt-tightening one.

According to Makarfi, Government must cut down on cost of governance in view of the prevailing realities, clarifying that the cut down must not entail layoffs but other areas of wastage.

Deputy Senate Leader, Abdul Ningi said that he did not see in the budget, the spirit of diversity from oil to other sources.

He also stressed the need for government to come up with the implementation level of the 2014 budget before deliberating on this year's appropriation.

Senator Ayogu Eze said the budget should serve as a wake-up call for all Nigerians, stressing that time for bazaar was over.

Senator Olubunmi Adetunmbi noted that going by the $65 crude oil price projection, the budget was in deficit of $28, stressing that there must be a basis for servicing the deficit.

The lawmaker was of the view that the budget should be returned to the executive to review it properly and fix realistic projections before the National Assembly would work on it.

The House of Representatives also yesterday passed the appropriation bill to its Committee on Finance, with education taking a large chunk of N399.9bn.

While introducing the appropriation bill, leader of the House, Hon. Mulikat Akande-Adeola explained that the budget was predicated on a revenue projection from oil and non-oil revenues.

Explaining the key allocations as contained the budget, the House Leader stated that education took almost four N400bn, followed by defence at N323.4bn.

After the passage of the bill to the committee stage, the House suspended plenary to allow various committees of the House meet with ministries and agencies of government on sundry issues.

The House is expected to resume sitting on 17th, February to allow members campaign in their various constituencies for re-election.

The Deputy Chairman of the House Committee on Media and Public Affairs, Hon. Victor Ogene, explained that the various committees would still be sitting despite the suspension of sitting.

On whether the delay in the passage of the budget would not affect governance, Hon. Ogene explained that the government has the right to continue spending so long as such spending does not exceeded the previous recurrent limit.

Meanwhile, prices of crude oil grades dropped further from $47 to $46 per barrel yesterday, following increased supply amid dwindling demand in the market.

For instance, the price of Brent, which is usually used to benchmark other crude oil prices, crashed from over $47 to $46.59 per barrel.

Also, the price of Organisation of Petroleum Exporting Countries, OPEC, basket of 12 crudes stood at $41.50 per barrel, compared with $43.55 the previous day, according to the organisation's Secretariat calculations.

The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).