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Tag: Oil benchmark

  • $51 oil benchmark okay for 2018 budget, say experts

    Experts have commended the decison to raise the oil benchmark from $45 to $51 per barrel for the 2018 budget passed on Wednesday by the National Assembly, more than six months after it was presented.

    The National Assembly passed the 2018 Appropriation Bill of N9.12 trillion, raised from the N8.61 trillion proposed by President Muhammadu Buhari on November 7, 2017.

    The budget expenditure was premised on oil price benchmark of 51 dollars per barrel as against 45 dollars proposed by the President.

    Crude oil production was bench-marked at 2.3 million barrels per day and exchange rate of N305 to one dollar.

    Acting Chairman Fiscal Responsibility Commission (FRC) Mr Victor Muruako, described the passge of the bill as “a relief to the nation.”

    Muruako said it would also bring hope to the populace and boost the economy.

    He described the crude oil benchmark at 51 dollars per barrel as the right thing to do, considering the current price of crude oil globally which yesterday hit the $80 threshold, the first time since 2014.

    “The crude oil price benchmark is very realistic because if you look at the current crude oil price you will see that 51 dollars is fair enough, because the essence of these things is not to have an unrealistic estimate.

    “Crude is going for 78 to 80 dollars per barrel and I think 51 dollars is even conservative but it is better to be on the safe side, so for me it is a commendable effort,” Muruako said.

    He also said the increase in the budget estimate by the National Assembly by N508 billion was in the interest of the country.

    The Lagos Chamber of Commerce and Industry (LCCI) also commended the oil benchmark.

    The Director-General of LCCI Muda Yusuf, said: “Given the development in the crude oil market, which has pushed oil price to about $80 per barrel, I think the decision of the National Assembly to increase the benchmark is understandable.

    “If the increase is in the areas that would make impact, particularly in the areas of infrastructure, security and health, it is welcome.

    “As at the time the budget was presented to the National Assembly, oil price was below $50 per barrel, so the adjustment is laudable,” he said.

    Yusuf urged the Federal Government to guard against a future recurrence of the budget delay process, adding that the delay might affect timelines for the delivery of capital projects and create uncertainties in the economy.

    “It is becoming a culture that we always have budget delays, which I do not think is good for our economy,” he said.

    President of the Chartered Institute of Bankers of Nigeria (CIBN) Prof. Segun Ajibola, describd the provision of N2.8 trillion for capital expenditure in the Budget as low.

    Ajibola in an interview with the News Agency of Nigeria (NAN) said: “Looking at the provision for the capital expenditure, one will say it is low because there are lots to be done in economy today in terms of capital projects.

    “In terms of infrastructure, we have power projects, railway, refineries, manufacturing and agriculture projects.

    “These are capital related projects that require substantial allocation from the budget.

    “When one looks at the state of economy today, one will say the provision of capital expenditure is low,’’ he said.

    Ajibola, however, called for timely release of funds to implement the capital projects.

    “We are in May now; we don’t want to hear that funds are not released for capital projects in October.

    “If that is the case, that means nothing can be achieved in the implementation of the 2018 budget,’’ the don said.

    “They are projects-hiked adjustment; they are adjustment that can be measured.

    “Also, I want you to know that the implementation of budget is done by the executive not the legislature, so the President will still do some consultations before signing the Budget.’’

    The don assured that the country’s rising debt profile of N21.7 trillion was nothing to worry about, though on the high side.

    He said it was not much to worry about because the quality of the debt was spent on projects so that the dividend of borrowing would come handy to an average Nigerian.

    “We also know that some of the debts are transmitted from local to foreign through Euro bond to reduce the debt burden.

    “It is also a good development when you look at the budget and debt services; we can say that the debt is channeled toward development,’’ Ajibola said.

  • Lawmakers raise oil benchmark to $51

    Six months and nine days after President Muhammadu Buhari presented the 2018 budget estimate to the joint session of the National Assembly, the Senate and the House of Represnetatives yesterday passed the Appropriation Bill.

    The estimated expenditure proposd by the President was raised to N9,120,334,988,225 — an increase of N508 billion.

    Senate Appropriation Committee Chairman Danjuma Goje explained that the increase of N508b (6 per cent) was done in collaboration with the Executive.

    He said it would be funded with the increased revenue expected from the alteration of the oil price benchmark which was raised from $45 per barrel to $51.

    He further explained that the oil production level and exchange rate were left the way the Executive proposed.

    Goje said the delay in passing the budget was regrettable. He however noted that the over six months delay was not the fault of the National Assembly contrary to what Nigerians have been made to believe.

    He noted that going forward; the fiscal estimates should be presented on time.

    Goje said that although he would not mention names, some minister still failed to appear before the subcommittees to defend their budget.

    Ministers, he said, should be encouraged to appear before subcommittees to defend their budget on time.

    On subsidy, he said that no provision was made for subsidy especially when subsidy had been officially abolished.

    The budget has the objective of delivering on three-year (2018-2020) Economic Recovery and Growth Plan (ERGP).

    The Appropriation Bill contained the estimates of revenue and expenditure totaling N8,612,236,953,214 made up of; Statutory Transfers N456,458,654,074;Debt Service N2,233,835,365, 699; Recurrent (Non-Debt) N3,494,277,820,219 and Contribution to Development Fund for Capital Expenditure N2,427,665,113,222.

    Highlights of the budget as passed by the Senate included Aggregate expenditure N 9,120,334,988,225; Statutory Transfers N530,427,363,624; Debt Service 2,203,835,365,699;  Recurrent Expenditure 3,512,677,902,077; Capital Expenditure 2,873,400,351,825 VI. Fiscal Deficit 1,954,464,993,775;  Deficit to GDP 1.73%.

    Goje added: “After close consultation with the Executive, the increase in oil price benchmark was applied in the following critical sectors of the economy: I. Reduction of deficit N50.88b; ii.Security N46.72b; iii. Health N57.15b; iv. Power, Works and Housing N106.50b, V. Education: particularly for the infrastructure for the 12 newly established Universities and meal subsidy in Unity schools N15.70b; Vl. Judiciary N10.00b; Vll. NDDC N44.20b.

    On revenue projection, Goje said that in processing the 2018 Appropriation Bill, the Committee premised expenditure on the following key revenue assumptions: a) Oil Price benchmark – USD 51) Crude Oil Production -2.3 mbp/d; and c) Exchange Rate N305/USD

    He said that the 2018 proposals had projected on oil price benchmark at USD 45. Crude oil production at 2.3mbpd and based on an exchange rate of N305 to 1 USD.

    Senate President Bukola Saraki said, “A lot has been said on the area of how we would have passed the budget earlier.

    “There is still room for improvement in the area of cooperation and collaboration between the Executive and the Legislature.

    “As you all know, at least 50% of capital expenditure of ministries, some have not done their defence up to February. This is an area we must work on as the two arms of government.

    “Let me also comment on some of the wrong impressions on the increase in the aggregate expenditure. This has been brought about by the frosty working relationship between the Executive and the National Assembly.

    “This was not properly explained and reported since yesterday. Both the Executive and the Legislature have seen areas where there is need for intervention.

    “We have heard the chairman on Works telling us that there is need for making sure there is equitable distribution of road projects which is taking a very significant amount

    At he House of Representatives, the House, sitting in Committee of Supply headed by Speaker Yakubu Dogara, passed the budget with13-clauses accompanying the bill.

    The House suspended its rules to immediately take the third reading of the bill and set up a conference committee headed by the Chairman House Committee on Banking and Currency Jones Onyeriere, to harmonize with the Senate.

    Chairman, House Committee on Appropriation Mustapha Dawaki while presenting his report before the House said the budgettd amount was raised due to certain interventions occasioned by the increase in oil price benchmark as follows :

    In a bid to stop the payments of unappropriated subsidies and other payments not approved by the National Assembly, the lawmakers inserted the clause ” The minister of Finance shall ensure that only funds appropriated under this act are released to the appropriate

    Dogara said there was no request for subsidies and that it can only come through supplementary budget and that the House cannot give approval for what was not requested  “we’re not Father Christmas here, ” he said.

    The budget is to run from the date in is assented into law till June 30th, 2019.

  • 2015 budget: Senate, Reps agree on $53 benchmark

    2015 budget: Senate, Reps agree on $53 benchmark

    The National Assembly Wednesday agreed on $53 per barrel as official oil benchmark for the 2015 budget.

    This follows the harmonization of the positions of the two chambers.

    While Senate had approved $52, the House adopted $54 per barrel leading to the raising of conference committees

    Senator Ahmed Mohammed Makarfi, headed the Senate conference committee while the House was headed by Hon.  Abdulmumin Jibrin, Chairman House Committee on Finance.

    The Nation learnt that both chambers met and agreed on $53 per barrel as official oil benchmark. N190 to $1 exchange rate in the 2015 budget was also agreed on by the committee.

    Another area of agreement was to trim the National Assembly budget of N150 billion by N30 billion, reducing the NASS budget to N120 billion.

    The issue of scrapping the Service Wide Vote was also agreed by both chambers.

    Also, they both resolved to cut the costs of oil production by N200 billion,

    Both the Senate and House are likely to  pass the 2015 budget before going on break for the .2015 general elections.

  • Senate to ‘override’ Jonathan’s veto on Budget

    Senate to ‘override’ Jonathan’s veto on Budget

    The Senate on Friday vowed to override President Goodluck Jonathan’s veto if he fails to assent to the 2013 Appropriation Bill passed by the National Assembly within the next one month.

    Already there are fears that the Presidency may withhold assent to the N4.98 trillion budget passed by both arms of the National Assembly on December 20 following the increase in crude oil benchmark.

    The lawmakers had in a conference raised the oil benchmark from $75 to $79.

    The Senate said if the President refuses to sign the budget into law, they will invoke necessary constitutional provisions and pass the 2013 Appropriation Bill into law.

    Chairman, Senate Committee on Media and Public Affairs, Senator Enyinnaya Abaribe, who spoke to our correspondent in Abuja on the row said the law was clear on what the National Assembly should do if the President decides to withhold assent to any Bill.

    Abaribe said: “The law will take its course. Yes. And what the law says is that any Bill that is not assented to by the President after one month, then the National Assembly will override the veto. The law is clear.

    “The National Assembly will follow the Constitution which says we can override the veto.

    “I mean, the matter is always very clear. It is not something that is subject to any other interpretation. We will follow the dictates of the Constitution.”

    On whether there will be option for a political solution between the National Assembly and the Presidency, Abaribe said: “Well, let me say that the agreement between the House and the Senate does not give room for any other maneuver because the rules of the National Assembly is that once you have a difference and you go to conference and you resolve that difference, you have no other room to bring it back again.

    “Except you now want us to review the whole document called the budget that has already been passed and I don’t think anybody is willing to do that.”

     

  • Oil benchmark: IMF tasks Nigeria on spending

    Oil benchmark: IMF tasks Nigeria on spending

    The International Monetary Fund said the Federal Government needs to curtail spending to avoid putting pressure on the crude oil benchmark.

    IMF’s Senior Resident Representative in Nigeria, Mr. Scott Rogers, gave the advice while briefing journalists on the Regional Economic outlook in Abuja on Thursday.

    “Higher benchmark price most often determines how much of the oil revenue gets distributed; if oil revenue gets distributed, it doesn’t mean you have to spend it.

    “So, generally raising the budget reference price means more money gets distributed to the different tiers of government, and what it then means is these governments can spend the money.

    “And if you spend the money, then again you have the adverses on the economy because you have government paying salaries, buying vehicles, gas and all these put pressure on price rates.”

    According to him, if the prices go up, the only way the Central Bank of Nigeria can reduce it will be by strengthening the monetary policy.

    He said the only way to do that would be to reduce government spending, adding that the best mechanism to curtail spending was through the budget reference price of oil.

    “The lower the budget reference price of oil, the lower government spending; assuming that you actually save the difference; which means, you don’t put it in the Excess Crude Account and take it back out again; you put it the Excess Crude Account and you leave it there.

    “And that’s the way it was designed and that is the only way it really has an impact,’’ Mr. Rogers told journalists.

    The News Agency of Nigeria reports that the 2013 budget has an oil benchmark of 75 dollars per barrel, but the House of Representatives wants it pegged at 80 dollar per barrel.

    On the regional outlook, he said the region still retained robust growth outlook, but noted that there was the need to monitor the uncertain disposition of the global economy.

    He said that Nigeria still had fair positive economic outlook, adding that in summary, the forecast for 2012 to 2013 showed strong but declining Gross Domestic Product.

    Rogers identified lower oil prices due to weak global economy as one of the three major risks to positive outlook.