2014 budget: Presidency, National Assembly on collision course over oil benchmark Our Reporter November 8, 2013 2 Comments » 2014 budget: Presidency, National Assembly on collision course over oil benchmark The imminent showdown is featured in the report of the National Assembly’s Joint Committee on Finance and Appropriation on the 2014/2016 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). The MTEF/FSP showed that the projected gross federally collected revenue for 2014 would be N10.519 trillion while N11.12 trillion and N11.493 trillion are projected as government revenue for 2015 and 2016 respectively. Consideration of the report was abruptly called off during yesterday’s plenary after it emerged that the House of Representatives was yet to receive its own version. Senate listed the report as part of its legislative business for the day but was stood-down after the information was relayed by Senate Leader, Victor Ndoma-Egba (SAN). Copies of the report, hitherto circulated, were withdrawn. A breakdown of the methodology for the MTEF/FSP showed that oral and written submissions were obtained from the Budget Office, Central Bank of Nigeria (CBN), Ministry of Petroleum Resources, Nigeria National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR), Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), Accountant General of the Federation, Bureau of Public Enterprises (BPE) and the Debt Management Office (DMO). For instance, the 2014 budget is predicated on crude oil production of 2.883 million barrels per day with a benchmark price of $74 per barrel and a projected aggregate expenditure of N4,77 trillion. From the revenue projection, capital expenditure is expected to gulp N1.45 trillion. New borrowing of N572 billion projected for 2014 would increase the totality of local and foreign debts to N8.25 trillion from N7.11 trillion in 2013. Meanwhile, a copy of the report obtained by Daily Sun, showed discrepancies in the proposed oil benchmark for the 2014 budget. The joint committee noted that while the oil benchmark prices of $74, $75, and $76 per barrel was fixed for 2014, 3015 and 2016 respectively, based on “current world market price for crude, the “ calculations showed that if government shares N666.9 billion to the three tiers of government, as being proposed next year, “ the effective benchmark proposed by the executive is about $80 per barrel. “The committee, after due considerations, recommends the adoption of $76.50 per barrel to take care of some aspects of pension arrears and critical projects of economic importance. This is in addition to the distribution of of N666.9 billion from the excess crude account as proposed by the executive.” Perhaps, tired of unnecessary public spending on subsidy of petroleum products, the joint committee has recommended that the National Assembly must work towards stopping the subsidy regime as the figure keeps increasing every year. On subsidy, the report notes that, “the ongoing plan by the government to streamline the management of subsidy through a tighter payment regime is a quality decision. However, it would have been better appreciated if subsidy repayment details were included among the executive submissions to the National Assembly to enhance accountability of the funds so far disbursed,” the report stated. “Furthermore, there is provision of N971.138 billion for petroleum subsidy for the 2014 fiscal year; the same amount paid in 2013. It states further, “Subsidy payment projections for 2015 and 2016 are, however, slightly increased from N971.138 billion in 2014 to N999.720 and N1.028 trillion respectively, without any explanations. There is need here for further scrutiny to ensure accountability, prudence and transparency. “Above all, a definite period must be worked out at which the nation will stop the importation of refined petroleum products into the country. The nation’s refineries must be made to work at full capacity and new ones brought on stream to energize the policy. We could not get any explanation from any of the agencies, if the subsidy payment includes subsidy on kerosene.” Meanwhile, the controversy raging on the Subsidy Re-Investment and Empowerment Programme (SURE-P) is yet to abate as the report frowns at the repeated roll-over of the programme’s funds from one financial year to another. The lawmakers also frowned at the practice where details of projects to be executed under the SURE-P budget are submitted for scrutiny and approval by the executive. “The continuous roll-over of unspent balances of SURE-P allocation from 2012 to 2013 and now, to 2014 is, to say the least, worrisome. “The current MTEF/FSP does not give sufficient explanation as to why the SURE-P allocation cannot be exhausted within a budget circle. Neither was any explanation offered for increasing running cost of the SURE-P management from N1 billion in 2013 to N1.20 billion in 2014. The report also “observed that of the N273.5 billion budgeted under SURE-P for 2013 instead of the yearly N180 billion only N104.1 billion had been expended on various projects and programmes. Provision had again been made to roll over to 2014, a total sum of N94.34 billion, an indication that about 34.50 percent of the 2013 SURE-P allocation would not be spent.”
Posted on: Fri, 08 Nov 2013 14:17:32 +0000
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