Budget 2013: Senate adopts $78 per barrel oil benchmark

Henry Umoru

17 October 2012, Sweetcrude, ABUJA — STRONG indications emerged, Tuesday, that Nigeria’s presidency and the national legislature may be headed for a showdown as the Senate has rejected government’s proposal of a $75 per barrel oil price benchmark for the 2013 budget, and raised it to $78 per barrel.

The Senate also approved a daily crude oil production of 2.53 million barrels per day, mbd, 2.61 mbd and 2.65mbd for 2013, 2014, and 2015 respectively at an average exchange rate of N160 to the dollar.

Also on Tuesday, the Senate rejected President Goodluck Jonathan’s structures of Subsidy Reinvestment Programme at the Federal Government, state, senatorial and local government levels, just as the lawmakers based their reasons on the fact that the measure had derailed from the intentions of the intervention programme.

These resolutions followed the adoption of the report presented by Senator Ahmed Makarfi, PDP, Kaduna North of the Senate Joint Committee on Finance and National Planning, Economic Affairs, and Poverty Alleviation on the 2013-2015 Medium Term Expenditure Framework and Fiscal Strategy Paper of the Jonathan administration.

Cautions FG against excessive borrowing
The Senate also advised the Federal Government to exercise what it termed extreme caution on foreign borrowing, adding that the administration should strengthen and consolidate its fiscal strategy to narrow the gap between projected and actual revenue for 2013-2015 by curtailing crude oil theft, and diversifying the economy to increase revenue.

Presenting the report, Makarfi, who noted that the joint committee observed that the oil benchmark could be increased to provide more funds to reduce deficit, reduce domestic borrowing and increase capital spending, said the committee agreed that $75 per barrel should be adopted for the MTEF and FSP while a higher benchmark would be adopted for the 2013 budget.

The committee observed that the rate of borrowing by the Federal Government was putting the nation at the risk of returning to the days of huge debt burden.

According to the Senate, the Federal Government must make specific provision for subsidy payments for 2013 or state its intention to stop subsidising petroleum products, adding that corporate tax and Value Added Tax rates of three per cent and five per cent be adopted by the Federal Government for the 2013-2015 period.

Addressing journalists after plenary, Chairman, Senate Committee on Information, Media and Public Affairs, Senator Enyinnaya Abaribe, PDP, Abia South, noted that the Senate would set up a conference committee to agree on the crude oil benchmark for the 2013 budget with the House of Representatives which had last week before the presentation of the budget to the Joint Session of the National Assembly by the President, put a benchmark price of $80 per barrel.

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  • Since both the President and the lawmakers claim they are working in the interest of the Nigerian people, we urge them to find common ground and not constantly seek to outdo each other. Interestingly, the President is of the PDP and the party has commanding majority in both the Senate and the House of Representatives. So, what seems to be the problem?