A Review of the Nigerian Energy Industry

Optimistic FG retains $65 oil benchmark, presents N4.3tn budget today

17 December 2014,, Lagos – The Coordinating Minister for the Economy and Minister of Finance Dr. Ngozi Okonjo-Iweala will today lay the 2015 budget estimates of N4.357 trillion before both chambers of the National Assembly.
According to a letter addressed to the Senate President, David Mark, and Speaker of the House of Representatives, Hon. Aminu Tambuwal, by President Goodluck Jonathan, the budget will be laid by the minister in accordance with Section 81(1) of the 1999 Constitution, as amended.
SenateHowever, despite tumbling oil prices, the federal government optimistically stuck to the $65 per barrel oil benchmark proposed for the 2015 budget as contained in the Medium Term Expenditure Framework (MTEF), which it re-submitted to the Senate on December 2.
The government had reviewed the oil benchmark from the earlier proposed $78 to $73 per barrel on November 18, but owing to the continuous drop in oil prices, the government further reduced the benchmark to $65 as contained in the second revised MTEF submitted on December 2.
Jonathan in his letter yesterday, explained that the executive had resolved not to further review the oil benchmark downwards despite the further drop of oil prices below the proposed $65 per barrel benchmark, saying there were indications that the price may range between $65 and $70 in 2015.
He however added that should the price fall below this projection, “the country would have to make further adjustments”.
Nevertheless, in the newest MTEF submitted to the National Assembly yesterday, the executive reduced the 2015 budget projections from the N4.661 trillion it submitted on December 2 to N4.357 trillion.
It also raised the foreign exchange rate from N160 to $1 proposed earlier to $165 to $1.
The last document had contained N4.661 trillion budget for 2015, which was meant to be predicated on $73 per barrel oil benchmark and a foreign exchange of N162 to the dollar as against the initial proposal of $78 per barrel benchmark and an exchange rate of N160 to the dollar.
However, while the executive retained the N2.622 trillion recurrent expenditure it proposed in the last MTEF, it slashed the capital expenditure by almost half in the latest document, reducing it from the N1.208 trillion proposed in its revised MTEF to as low as N627 billion, implying that there will be dearth of capital projects in the country next year.
The executive had on September 30, first proposed N1.436 trillion before reducing it to N1.208 trillion.
It also reduced the Subsidy Reinvestment and Empowerment Project (SURE-P) estimate from N184 billion to N102 billion. It had proposed N259 billion in the first MTEF.
While the document retained the projection of 2.2782 million barrels per day for crude oil production, it reduced its kerosene subsidy from N156 billion projection to N91 billion, while it put the revenue target at N3.602 trillion.
Meanwhile, ahead of the budget’s presentation, the House speaker and other principal officers of the lower legislature held a two-hour session with the finance minister.
Tambuwal, who had no problem accessing the National Assembly complex with his colleagues, met with Okonjo-Iweala behind closed-doors to set the tone of the debate on the floor of the House on the 2015-2017 MTEF and 2015 budget.
However, Hon. Femi Gbajabiamila, the House Minority Leader, who was also part of the meeting with the minister, at the commencement of proceedings at the plenary, invoked Order 6, Rule 1, insisting that the president appears himself to lay and present the budget and not the finance minister.
But the Deputy Majority Leader, Hon. Leo Ogor, argued differently, relying on Section 81 of the constitution, stating that there was no onus on the president to lay the budget.
“If this is to be done, then the constitution will have to be amended,” he stated.
At this juncture, the speaker intervened, citing a relevant portion of the constitution in support of Ogor. Tambuwal explained that the president “shall cause to be prepared and laid the estimates of revenue and expenditure of the federal government in the coming year”.
“No where in the provision is it said that the president must personally lay the budget. We must not be now seen to be compelling the public officer to come and perform such a function,” Tambuwal said as he ruled Gbajabiamila out of order.
However, the drama did not abate as Hon. Aliyu Madaki (APC, Kano) interrupted Ogor’s speech moving a motion for the approval of the CME’s appearance.
According to Madaki, receiving the budget is an aberration considering the fact that it will amount to flouting the House’s tradition of fixing the oil benchmark and consideration of the MTEF.
Again, the Speaker steered the discussion away from the looming controversy. He concurred with Madaki’s observation, but explained that since the president has admitted the procedural gap, “it is not only a matter of privilege but a point of law to pass the MTEF before the budget”.
“However, that won’t stop us from meeting with the minister. What will happen is that we will consider the MTEF before receiving the budget,” he opined.
Thereafter, Hon. Samson Osagie (APC, Edo) seconded Ogor’s motion to receive the CME.
Prior to the debate, Tambuwal had read the president’s letter on the submission of the 2015-2017 MTEF.
Also, ahead on the budget’s presentation today, the president yesterday evening met with the principal officers of the House of Representatives.
The closed-door meeting, which lasted for two hours, was held at the Presidential Villa in Abuja.
Deputy Speaker, House of Representatives, Hon. Emeka Ihedioha and the Leader of the House, Hon. Mulikat Adeola-Akande led their colleagues to the meeting.
The meeting was attended by the National Chairman of the Peoples Democratic Party (PDP), Adamu Mu’azu.
Those who attended the meeting, refused to speak to State House correspondents on what transpired at the meeting.
Checks by THISDAY however revealed that 2015 budget topped the agenda of the meeting.


– This Day

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