Senate increases oil price benchmark to $28, approves revised 2020-2022 MTEF, FSP

The Senate, on Tuesday, increased the $25 per barrel oil price benchmark proposed by the executive in the revised Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) forwarded to it for approval.
The upper chamber made the increase on the oil price benchmark to $28.
The resolution was sequel to the consideration and adoption of report of its Committee on Finance mandated to work on the revised MTEF/FSP documents by the executive during plenary.
The Chairman of the Committee, Senator Solomon Olamilekan, presented the report.
Olamilekan in his submission said the increase effected on the oil price benchmark was as a result of the recent upward trend of the crude oil market which stood at $38 per barrel with a very strong expectation that the price would rise to as high as $40 to $45 per barrel.
The senate also reduced from 1.9 million barrel per day to 1.8 million barrel per day oil production proposed by the executive in the MTEF/FSP documents.
This is as it declared monies kept in the Natural Resources Development Accounts as waste.
However, other critical parameters including the exchange rate of N360 to a US dollar, 14.43 inflation growth rate and 4.42 Gross Domestic Product (GDP) growth rate were retained.
Other assumptions cum proposals retained include N5.09 trillion Federal Government’s revenue, N10 .51 trillion proposed expenditure, N4.95 trillion fiscal deficit, N4.17 trillion new borrowings (including Foreign and domestic Borrowings).
The Senate also retained the critical components of the proposal as presented by the executive with adoption of N10.51 trillion as total expenditure, N4.93 trillion as total recurrent, N2.83 trillion for personnel cost and N2.23 trillion for capital expenditure.
In his remarks, President of the Senate, Ahmad Lawan urged the Senate Committee on Privatisation to liaise with the Bureau of Public Enterprise (BPE) in ensuring that the projected N260 billion from proceeds of privatised agencies was realised and accordingly used to fund the budget.
He frowned at some of the special accounts being kept by the executive, particularly the Natural Resources Development Accounts.
According to him, such accounts at this time of scarcity of funds to finance the budget are not all that necessary.
“Keeping monies in Natural Resources Development Accounts is more of waste than serving critical purposes,” he said.
He, thereafter, adjourned sitting of the Senate to Tuesday, June 9, for consideration and possible passage of the revised N10.509 trillion 2020 budget.
Also, the Senate passed the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) presented by President Muhmmadu Buhari for consideration of Senate.
Adeola said following the revision of MTEF and FSP, the 2020 Federal Government’s budget would be amended to reflect the changes articulated.
He said the proposed amended of the budget provided for the COVID-19 Crisis Intervention Fund and other adjustments required due to the decline in international oil prices.
The Senate after presentation of the report and contributions of senators approved the recommendations of the committee.
Some of the recommendations include that the price of crude oil be increase to 28 dollars per barrel as against the 25 dollars per barrel proposed by the executive in the 2020-2022 MTEF and FSP.
This it said was a result of the recent upward trend of the crude oil market which as today stood at 38 dollars per barrel with a strong expectation that the price will rise to 40 dollars to 45 dollars per barrel.
It also approved that the oil production output be sustained at 1.8 million barrels per day as proposed by the executive as this was the decision of cutting production by OPEC which Nigeria is a member.
It also approved that the deficit of N4.9 trillion on the budget would largely be financed from new borrowings by the federal government
In a related development, Senate also at plenary approved Buhari’s external loan request of N5.513 billion to fund the revised 2020 Appropriation Act.
The approval of the request was sequel to the presentation of a report by Senator Clifford Ordia (PDP-Edo), Chairman Senate Committee on Local and Foreign loan.