2011 Budget: House Seek Upward Review Of $65 Oil Benchmark
ABUJA, Feb 03, (THEWILL) - The House of Representatives Committee on Finance today asked the Executive to consider reviewing upward the oil benchmark for the 2011 budget pegged at $65 dollars per barrel of crude.
The House reasoned that with the prevailing crude oil price of about 90 dollars per barrel in the international market, there is need to adjust the benchmark and raise it to conform with the reality on ground.
Chairman of the Committee, Hon John Enoh who made the suggestion argued that leaving the benchmark at $65 dollars per barrel would mean creating more funds for the excess crude account, which he noted was being drawn and shared by the three tiers of government without recourse to appropriation by the National Assembly.
He said he was also worried about the N1.38 trillion budget with a 2.3 million barrel per day oil production target, and just a little above N1 trillion capital vote, as there were chances of government borrowing to finance recurrent expenditure.
According to him, such a situation would not be in the interest of the economy, and further urged the Director General of the Budget Office, Dr Bright Okogwu to suggest alternative ways of raising another N300 billion to finance capital projects in the year.
Estimated non-oil revenue in the 2011 budget include; N450 billion from Customs and Excise, N625 billion from Value Added Tax (VAT) and an additional N632 billion from other sundry sources.
In his summation, the Director General insisted that the $65 dollars benchmark was arrived at after wide consultations with other relevant agencies, and careful observation of global trends was in order.
He said increasing the figure was like looking for an easy way out as the international oil market was a very volatile environment which could crash the 2011 budget if targets are not well projected.
“What we need is for us to see people who are facing similar situations with us are doing. If we earn more later, then it is good fortune for the country,” he said, adding that it would be easier to do an upward review if the need arises.
On the sharing of funds from the excess crude account, Okogwu said the Sovereign Wealth Fund Bill currently before the National Assembly would address the fears of the legislature when passed into law.
He commended the legislators for pursuing for remittance of internally generated revenue by MDAs, and the introduction of forensic audit by the Nigeria National Petroleum Corporation (NNPC), saying that more funds would come into government coffers.
With a deficit of below three percent of the Gross Domestic Product (GDP) the DG said the 2011 budget was in the right direction, adding that “we have a very good chance of improving.”