17 October 2012

Nigeria: Budget 2013 - Senate Dumps FG's Oil Benchmark, Adopts U.S. $78 Per Barrel

Photo: This Day
Nigeria oil price

Abuja — Strong indications emerged, yesterday, that the Presidency and the lawmakers may be poised for a war as the Senate has rejected the Federal Government's pegging of $75 per barrel as benchmark for the 2013 budget and raised it to a higher rate of $78 per barrel.

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

Also yesterday, 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.

Advises FG on 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 subsidizing petroleum products, adding that corporate tax and Value Added Tax (VAT) rates of three per cent and five per cent be adopted by the Federal Government for the 2013-2015 period. It also approved the transfer of the Comprehensive Import Supervision Scheme (CISS) account to the Customs.

Speaking further, Makarfi who said the projected fiscal deficit for the period of 2013-2015 as contained in the MTEF document were N1.937 trillion, N900.8 billion and N738.4 billion respectively. He added: "The total level of spending implied a deficit of 2.85 per cent, 2.17 per cent, 1.60 per cent and 1.11per cent of GDP in 2012, 2013, 2014 and 2015 respectively as against 6.60 per cent of GDP in 2010.

"While high level of foreign borrowing could return Nigeria to where we came from, that is, high level of foreign debts, high level of domestic borrowing can push up interest rate and crowd out private sector from the credit market."

Senate donates N22.8m to flood victims

Meanwhile, Senate President David Mark has announced a donation of N22.8million to victims of the recent flood disaster throughout the country.

Mark, who noted that it was the desire of the Senate to ensure speedy development of the country through the process of budgeting, however, stressed that members should reserve their elaborate debates to the consideration of the 2013 budget, which would commence today.

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.

Mark disclosed that the 10 principal officers of the Senate would donate N300,000 each amounting to N3 million while the remaining 99 senators would donate N19.8 million.

Copyright © 2012 Vanguard. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.