– wants benchmark increased to $73 per barrel, subsidy raised to N4trn
SENATE President, Ahmad Lawan, on Tuesday, April 12, 2022, confirmed at the day’s plenary receiving a request from President Muhammadu Buhari to approve adjustments to the 2022 fiscal framework, as the Senate read it for consideration.
Lawan noted during the consideration that Buhari sent the request to the National Assembly in a letter dated April 5, 2022.
According to the letter read on the floor of the Senate, Buhari explained that an adjustment to the 2022 budget became imperative in view of new developments in both the global and domestic economies.
The President noted that the developments were occasioned by spikes in the market price of crude oil, which were a fallout of the Russian-Ukraine war.
“As you are aware, there have been new developments both in the global and domestic economies, which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 Budget was based.
“These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, and significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.
“The decision to suspend the removal of Petroleum Motor Spirit (PMS) subsidy at a time when high crude oil prices have elevated the subsidy cost has significantly eroded government revenues,” he said.
He, therefore, requested the upper chamber to approve an increase in the oil benchmark by $11 per barrel, from $62 per barrel to $73 per barrel.
The President also sought a reduction in the projected oil production volume by 283,000 barrels per day, from 1.883 million barrels per day to 1.600m barrels per day.
He further requested the chamber to approve an increase in the estimated provision for PMS subsidy for 2022 by N3.557 trillion, from N442.72 billion to N4trn.
The President, in the request, underscored the need cut in the provision for Federally funded upstream projects being implemented by N200bn, from N352.80bn to N152.80bn.
He proposed an increase in the projection for Federal Government Independent Revenue by N400bn; and an additional provision of N182.45bn to cater for the needs of the Nigerian Police Force.
The President’s request noted that “based on the above adjustments, the Federation Account (Main Pool) revenue for the three tiers of government is projected to decline by N2.418trn, while FGN’s share from the Account (net of transfer to the Federal Capital Territory and other statutory deductions) is projected to reduce by N1.173trn.”
He further disclosed that the amount available to fund the budget was projected to decline by N772.91bn due to the increase in the projection for Independent Revenue (Operating Surplus Remittance) by N400bn.
He projected Aggregate Expenditure to increase by N192.52bn, due to increase in personnel cost by N161.40bn and other service-wide votes by N21.05bn (both for the Nigeria Police Force), additional domestic debt service provision of N76.13bn, and net reductions in Statutory Transfers by N66.07bn.
Buhari, giving a breakdown, said the net deductions would see a cut by N13.46bn, from N102.78bn to N89.32bn for NDDC; NEDC, by N6.30bn, from N48.08bn to N41.78bn; UBEC, by N23.16bn, from N112.29bn to N89.13bn; Basic Health Care Fund, by N11.58bn, from N56.14bn to N44.56bin; and NASENI, by N11.58bn, from N56.14bn to N44.56bn.
The President noted that the total budget deficit was projected to increase by N965.42bn to N7.35trn, representing 3.99 per cent of the gross domestic product.
He stressed that the incremental deficit would be financed by new borrowings from the domestic market.