…Fixes Oil Benchmark At $73 Per Barrel
BEVERLY HILLS, November 19, (THEWILL) – The Presidency on Wednesday submitted a new revenue projection that factored in new economic realities in the country.
This is against the backdrop of the much publicised austerity measures announced by the Minister of Finance, Dr. Ngozi Okonjo-Iweala.
President Goodluck Jonathan in a letter to the President of the Senate, David Mark, said that the Federal Government has cut its earlier projected revenue of N4.724 trillion to N4.661 trillion.
In a letter dated November 18, 2014, which was read in the Senate on Wednesday, President Jonathan noted that though he had earlier transmitted the 2015-2017 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the lawmakers, recent developments in the international oil market have necessitated a revision of the MTEF.
In the new MTEF/FSP, the government is proposing an oil benchmark of $73 per barrel against the $78 earlier proposed.
The government is also proposing an exchange rate of N162 to the US Dollar instead of N160 to One US Dollar initially proposed.
The new MTEF also indicates that the projected total oil and gas earnings will be cut to N6.833 trillion from N7.286.89 trillion.
The new document also indicates that the Federal Government is projecting a capital expenditure of N1.208 trillion, while the sum of N2.622 trillion would be spent as recurrent expenditure.
The new MTEF also explained efforts being made by the government to tackle crude oil theft and pipeline vandalisation, as security agencies are to start ground and aerial surveillance. The Ministry of Justice has also been told to ensure speedy prosecution of oil thieves and vandals.
The document stated: “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 government also said that it was taking the issue of insurgency very seriously as an agency of government is already addressing the matter in conjunction with foreign partners.
The document stated: “The issue of insurgency in parts of the North east is still a risk to economic and commercial activities, and by extension, government tax revenue. Consequently, government will intensify the utilisation of its three-pronged approach including a firm security response, continued political dialogue and a package of development assistance to check mating the security situation.
“Already, a Presidential Initiative for the North East (PINE) Committee is working together with some development partners towards finding a lasting solution to the insurgency.”
EMMA UCHE, ABUJA
