Against Buhari’s Proposal, Senate Pegs Oil Benchmark at $47 Per Barrel

0
59
….2018 Budget Passes Second Reading as Senate Adjourns Till Nov. 19
BY SOLOMON AYADO and AHURAKA ISAH,  Abuja
Senate has raised the oil benchmark for the 2018 budget to $47 contrary from the $45 per barrel as proposed by President Muhammadu Buhari.
The decision of Senate yesterday at plenary followed a careful consideration  and adoption of the report by its Joint Committee on Finance , Appropriations, and National Planning and Economic Affairs on the 2018 -2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
The lawmakers had earlier suspended debate on MTEF/FSP on the excuse of perceived possible changes in the price of oil, ahead of the OPEC meeting at which producers were expected to
extend a supply-cut deal that came into effect in January with the goal of
tightening supplies and propping up prices.
As usual, Senate in line with its tradition, has to first approve the
MTEF-FSP document before any consideration for passage of the 2018 budget proposal.
But with the successfull passed of the MTEF-FSP, it has become evidently clear that the process of seeing through all the encumbrances for the okaying of 2018 budget estimates are now fastracked.
President Muhammadu Buhari plans a budget of N8.61 trillion for 2018 with
more than N4 billion expected to come from oil predicted on oil benchmark
price of $45 per barrel and a daily oil production level of 2.3 million
barrels.
Buhari said the 2018 budget proposals are for a Budget of consolidation with principal objective to reinforce and build on recent accomplishments and to sustain the reflationary policies of the past two budgets.
He therefore had set out the key parameters and assumptions for the 2018 Budget to include a benchmark oil price of US$45 per barrel; Oil production estimate of 2.3 million barrels per day, including condensates; exchange rate of N305/US$ for 2018 and real GDP growth of 3.5 percent as well as Inflation Rate of 12.4 percent.
However, Senate yesterday in accordance with the Fiscal Responsibility Act 2007 made several recommendations on the key assumptions.
The report of the Joint Committee on Finance , Appropriations, and National Planning and Economic Affairs on the 2018 -2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) was presented by Senators John Enoh (Cross River Central), Danjuma Goje (Gombe Central) and Musa Kwankwaso (Kano Central) respectively.
While adopting $47 per barrel as benchmark price for 2018 budget,  the lawmakers said the recommendation is in consideration of the current positive outlook in the global oil market and expectation that OPEC and other allied oil partnership countries will sustain oil production cuts deep into 2018.
On the oil production target, the lawmakers recommended that the 2.3 million barrel per day is achievable but largely dependent on the ability of the Federal government to increase it’s engagement with Niger Delta militants and stakeholders in oil producing communities, as well as progress on the passage of the Petroleum Industry Bill (PIB), sustained security and promotion of new private sector investment.
For exchange rate,  the Upper Chamber recommends the adoption of N305/US Dollar as proposed by the executive, further insisting that the CBN should evolve measures to close the gap between pararel market and official exchange rate.
The assumptions for non-oil revenue remain guided by improved efficiency of collections and expected growth in the sector and the projected N5.279 trillion by the executive is adopted by senate while it said N1.699 trillion should be the new borrowing for 2018 and tied only to project basis.
On revenue generation, the lawmakers recommended that the National Assembly should amend the relevant Laws of the Fiscal Responsibility Act while it adopted that the proposal of 4.5% growth rate (GDP) and subsequent adjustment to 3.5% is more realistic with the latest figures doubling growth rate to 1.4% in third quarter, 2017.
***Senate Adjourns Till Nov 19 As 2018 Budget Passes Second Reading
Meanwhile, The 8th Senate has passed the Second Reading of the 2018 Appropriation Bill.
Also, the Senate has adjourned sitting till Tuesday, 19th December, 2017 so to enable all the Committees wrap up and be able to present their reports by the forthcoming public hearing on the 2018 budget.
The Bill has been forwarded to the Committee on Appropriations and its various sub-committees for further consideration and budget defence by the various ministries, departments and agencies of the Federal Government.
Speaking on the passage, Senate President Bukola Saraki said: “Let me respond with a general note of warning to all Heads of MDAs to ensure that they strictly respect the letters of invitation and the timetable. This is not time for excuses for Ministers or Heads of parastatals to be traveling and not be able to attend their budget defense.
“We do not have the time. This is a very short timeframe, therefore, I expect all MDAs to be able to respect our invitation and be there on time,” he stated.