Nigerian Senators divided over oil benchmark for 2016 budget

Senate chamber

Members of the Nigerian Senate on Wednesday commenced debate on the Medium Term Expenditure Framework (MTEF) presented to the upper legislative body by President Muhammadu Buhari.

Mr. Buhari had forwarded the MTEF to the Senate on Monday.

Under Nigerian public finance system, the MTEF is the precursor to budget, as well as Fiscal Strategy Paper (FSP), which details spending and revenue projections for three years.

At the Senate plenary Wednesday, lawmakers differed on the $38 per barrel benchmark projected as the price of crude of oil, the mainstay of the Nigerian economy.

Leading the debate, the Deputy Senate President, Ike Ekweremadu, asked the Senate to consider an upward review of the crude oil benchmark for the 2016 budget.

‎In his opinion the $38 oil benchmark is “conservative”.

Mr. Ekweremadu therefore urged the senate to peg the oil benchmark for the 2016 budget at $40 per barrel.

“I have looked at the projection for the oil price,” he began, adding that “the benchmark of $38 per barrel appears to me to be conservative. From the projection of oil price for 2016 it is estimated‎ that it will hover between $40 and $45.

“I like to suggest that the senate consider an oil benchmark of $40. I’m sure that this will help cushion the problems we have in the states.”

However, Adamu Aliero, an All Progressives Congress Senator from Kebbi State‎, opposed Mr. Ekweremadu’s proposal, saying it was unrealistic.

“It is unrealistic. I therefore recommend we take it to $35 per barrel,” he said.

‎Mr. Aliero added that it had been projected that the global price of crude oil would fall further in 2016.

The global price of crude oil fell from $38 to $35 on Wednesday.‎

‎Also, speaking, Olalekan Adeola (APC-Lagos West), queried the indices used by the Buhari-led cabinet in determining that “the price of oil will increase or decrease or fall below $38″.

“We can allow it (benchmark) to be like that but we should let the committee do a thorough job,” Mr. Adeola said.

Speaking further, he urged the Federal Government to increase borrowing and improve budgetary share of capital expenditure.

Mr. Adeola’s view on capital expenditure vis-a-vis infrastructural development was corroborated by Ben Bruce (PDP-Bayelsa East), who canvassed massive borrowing to “industrialize this nation” and develop infrastructure.

Saying “it does matter the party it comes from; what is important is that we develop”, Mr. Bruce maintained that “this budget is good” and commended the Finance Minister for a “good job”.

Also, he said if petrol was fully de-subsidized, the effect would be felt in the public transport sector. He noted that “prices of goods would not increase since diesel had always been deregulated.”

He, therefore, urged Mr. Buhari to subsidize public mass transit system, citing instances the United States, Germany and South Africa as examples of countries where that had been done successfully.

Dino Melaye (APC-Kogi West) also made a case for infrastructural development.

He proposed that capital expenditure be increased to 35 per cent because “APC promised infrastructural development”.

Peter Nwaoboshi (PDP-Delta North) drew the attention of the Senate to alleged “hidden things” in the MTEF.

For instance, he said it should be noted that “this government has removed subsidy on kerosene”.

Also, he said allocation to the Niger Delta amnesty programme had been reduced.

For him, the fall-out of the Bayelsa election showed that militants still existed.

Thus, he urged the Federal Government to jettison any plan to cut its commitment to the amnesty programme.

He also noted the reduction of National Assembly budget from N120 billion to N115 billion.

Mr. Buhari proposed N500 billion for social welfare programme in the 2016 budget.‎

“The federal government will collaborate with state governments to‎ institute well-structured social welfare intervention programme such as school feeding programme initiatives, conditional cash transfer to the most vulnerable, and post National Youth Service Corps (NYSC) grant,” the president said in a letter containing read by the Senate President, Bukola Saraki.

“N500 billion has been provisioned in the 2016 budget as social investments for these programmes.”

Mr. Buhari added that the interventions would start as a pilot scheme, and that the government would work towards securing the support of donor agencies and development partners in order to minimise potential risks.

The MTEF was later referred to the Senate Committees on Appropriations and Finance for further legislative actions.

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