Owing to the steep decline in oil earnings, the Federal Government yesterday cut an earlier projected N4.724 trillion 2015 budget to N4.661 trillion as the new Appropriation Bill for next year.
In a November 18, 2014 covering letter sent to Senate President David Mark on Wednesday, President Jonathan noted that although he has earlier transmitted the 2015-2017 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), however, “recent developments in the international oil market have necessitated that the MTEF be revisited.
The MTEF/FSP is the precursor of the national budget and the plank upon which government spending is based. The National Assembly must pass the MTEF/FSP before the President lays the budget before the two chambers, as prescribed by the Fiscal Responsibility Act.
In the new MTEF/FSP, the new oil benchmark is revised down from an initial $78 per barrel of oil to a realistic $73 per barrel. Moreover, the new exchange rate of a dollar to the naira is now N162, from an initial N160-$1.
New figures in the revised version also indicate that instead of N7.286.89 trillion projected as total earnings on oil and gas sales in 2015, the figure has been cut to N6.833 trillion.
Nevertheless, in the new document, the federal government has now projected that it would spend N1.208 trillion as capital expenditure for ministries, departments and agencies while N2.622 trillion would be spent as recurrent expenditure.
Besides, borrowings in 2015 stands at N570 billion while subsidies on kerosene and Premium Motor Spirit (PMS) otherwise known petrol will now gulp N350.23 billion only.
As part of efforts to tackle crude oil theft and pipeline vandalisation, the security agencies are expected to start ground and aerial surveillance while the Justice Ministry would ensure speedy prosecution of oil thieves and vandals.
“The activities of crude oil thieves and oil pipeline vandals remain the main risks to oil production. The potential implications of their activities are a reduction in government revenue with further impacts on government debts and fiscal deficits as well as pressures on the exchange rate.
“Given the role of oil production volume on government finances, government remains committed to curbing these nefarious activities. Consequently, it is intensifying security, particularly ground and aerial surveillance, around oil facilities through the combined efforts of security agencies and local communities’ participation.
“These security forces under the National Executive Council Committee are being better equipped to checkmate the activities of oil thieves and pipeline vandals. There would also be better engagements of the Ministry of Justice and lawyers for faster prosecution of oil thieves. In addition, a quick passage of the PIB will undo the uncertainties undermining new investments in the oil industry, thereby raising oil production.” – The Sun
