Chuks Okocha
10 November 2008
Abuja — Following the declining prices of crude oil in the international market, the 36 governors of Nigeria will today hold a crucial meeting to discuss its implications on the country's revenue profile.
Also at today's meeting, the governors will take a final decision on the award of contracts for the building of the N4.9 billion National Secretariat of the Governors' Forum.
THISDAY gathered that the meeting is expected to hold at the Kwara State Governor's Lodge, Asokoro, Abuja,
The declining crude oil prices may affect individual state budgets next year since they are benchmarked against the prices.
The Excess Crude Account, in which the difference between the actual market price and the benchmark is saved, will also be affected by the falling prices - meaning there will be less money to be shared from the account by the three tiers of government.
The Governors' Forum also has on its agenda the final deliberation and position of the governors on the Fiscal Responsibility Bill currently before the National Assembly.
According to the agenda of the meeting made available to THISDAY, the governors are expected to discuss the report of the Power Sector Probe as its affects the various states.
Also on the agenda of the meeting is the Progress Report on the Millennium Devel-opment Goals (MDGs) and the impact on the states. Officials of the MDGs are expected to brief the governors on its progress in the 36 states of the federation.
Meanwhile, THISDAY learnt at the weekend that the Minister of Finance, Dr. Shamsuddeen Usman, has begun a series of meetings with the Finance Committees of both the Senate and House of Representatives.
The purpose of the meetings, according to a lawmaker, was to iron out "grey areas" in the budget before President Umaru Musa Yar'Adua formally presents it to a joint session of the National Assembly.
A key area of possible disagreement is the crude oil benchmark. While Yar'Adua favours a conservative price, the National Assembly has in the past favoured a higher price.
The meetings, which are expected to be concluded this week, offer an avenue for the Executive and the Legislature to discuss some of the potential disagreements when the budget is finally submitted for appropriation.
The Federal Government expects to spend N2.67 trillion next year, and hopes to realise a total of N4.558 trillion as revenue.
In a document on the proposed 2009 budget titled "Federal Government of Nigeria 2009 Budget Prep-aration and Submission Call Circular", reported by THISDAY last week, the proposed N2.67 trillion expenditure is made up of statutory transfers of N164.3 billion, debt service of N436.2 billion and spending of N2.076 trillion for Ministries, Departments and Agencies (MDAs) including Multi Year Tariff Order (MYTO) of N60 billion
The aggregate expenditure profile represented a dec-rease of 2.6 per cent and a decline of 6.2 per cent in MDA allocation when compared to the N2.745 trillion and N2.2 trillion of 2008 budget respectively.
For the draft budget, Usman attributed the decline to reduction in the total expected revenue to be raked in from an estimated lower production level of 2.3 million barrels per day (mbpd) as against 2.45mbp used for 2008 budget.
He also explained that the decline was as a result of the sliding oil prices at the international market, which had fallen from a peak of about $147 per barrel to a current level of $64 per barrel.
According to him, "The total available resource base is smaller as a result of the fact that oil production used for 2009 budget is at a more realistic level of 2.3 Mb/d vs. 2.45 Mb/d used in the 2008 budget, but actual output in the first half of 2008 was just 2.02 Mb/d, following continued disruption to production.
"The oil price has been declining in recent months - from a peak of about $150 per barrel in June to $112 per barrel in August."
Further breakdown reve-aled that, statutory transfers has been put at N164.3 billion, made up of N89.7 billion to the National Judicial Council, N34.9 billion to Niger Delta Development Commission and N39.7 billion to the Universal Basic Education Commission.
The debt service payment of N436.2 billion will be used as N387.8 billion for domestic debt and N48.4 billion for foreign debt.
The MDAs are expected to spend N2.076 trillion, from which the sum of N110 billion, being savings from Paris Club debt relief will be spent exclusively on specific projects and programmes to support the attainment of MDGs.
Also as part of the MDA spending, the sum of N60 bilion is set a side for MYTO in the power sector as, according to the document, government moves to tackle the challenges in the sector even as the sum of N200 billion will be set aside to finance the pension and the ongoing public service reforms initiative.
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