Tuesday, 5 May 2015

N145.52bn Approves for Fuel, Kerosene Subsidy

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President Goodluck is expected to assent to the 2015 budget recently passed by the National Assembly soon as the Coordinating Minister for the Economy (CME) and  Finance Minister, Dr. Ngozi Okonjo-Iweala declared on Tuesday that what the parliament passed ‘is not dramatically’ different from what was sent to it by the executive.

And contrary to claims in some quarters that subsidy on petroleum motor spirit (PMS) had been removed from the budget to torpedo the smooth take-off of the incoming administration, Okonjo-Iweala confirmed that a total of N142.52 billion was provided in the budget for both PMS and kerosene.
She gave the breakdown as N100 billion for PMS and N42 billion for household kerosene, otherwise known as Dual Purpose Kerosene (DPK).
At the 2015 budget briefing in Abuja yesterday, the minister gave the parameters as $53 per barrel benchmark, a dollar higher than what was proposed to the National Assembly; exchange rate of N190.
The minister, who expressed appreciation to the National Assembly for finding time to pass the budget in spite of the demands of electioneering,  stated that the Senate had passed the 2015 Budget on April 28, 2015 following the passage of the same bill by the House of Representatives on  April 23, with an expenditure outlay of N4.493 trillion (up from the N4.425 trillion proposed by the  President.
This, she said, represents an increase of N67.43 billion, adding that the parliament passed a benchmark oil price of US$53 per barrel ($1 higher than the Budget proposal; generating an extra revenue of N54.25 billion for the government.
According to her, other key parameters driving the oil revenue side of the budget were retained, including oil production volume of 2.2782mbpd and an exchange rate of N190/$.
The minister said It was important to note that the lawmakers approved the N100 billion and N45.52 billion provisioned for fuel and kerosene subsidy proposed by the Executive.
While other components of non-oil revenue were also retained as proposed, the minister disclosed that the federal goverrnment Independent Revenue was raised by N39.294 billion, from N450 billion to N489.294 billion.
Based on the above, she affirmed that  Gross Federally Collectible Revenue increased by N169.845 billion, from N9.61 trillion to N9.78 trillion, as a direct result of raising the benchmark price.
FGN Budget Revenue also rose from N3.358 trillion to N3.452 trillion even as aggregate expenditure passed  by the parliament stands at N4.493 trillion—N67.43 billion higher than the proposed aggregated expenditure of N4.425 trillion.
  The National Assembly also retained the N943.62 billion proposed by the Executive for Debt Service while  Statutory transfers increased by N9.34 billion, from N366.28 billion to N375.62 billion.
The Niger Delta Development Commission (NDDC ) vote also increased from N45.78 billion to N46.72 billion (an increase of N940 million), while that of Universal Basic Education (UBE) also increased from N67.30 billion to N68.38 billion (an increase of N1.08 billion).
According to the CME, “these are strictly based on formula driven by the increase benchmark oil price.”
National Assembly allocation was raised by N5 billion, from N115 billion proposed by the Executive to N120 billion.
Aggregate capital expenditure (including transfers and SURE-P) increased to N722.20 billion, from N663.67
This comprises an increase of N37.77 billion in Ministries Departments and Agencies’ (MDAs’) capital and N20.80 billion for Millennium Development Goals (MDGs) under capital supplementation.
However, while the National Assembly completely removed N5 billion proposed for the Integrated Personnel and Payroll Information System (IPPIS), N1 billion was provisioned for a new project, National Assembly Clinic.
Capital development of the National Institute for Legislative Studies was also increased by N4 billion (from N2 billion to N6 billion).
But the provision of N20.78 billion for SURE-P capital spending as proposed in the Appropriation Bill presented by the Executive was retained.
Responding to questions on what would become of capital releases which have been stalled due to 50 per cent revenue drop, the minister said she could not speak for the incoming administration since the government she is serving is winding down on May 29.
She maintained her position that the year would be a difficult one due to the revenue slump, adding that the serious cash crunch had been ingeniously managed month by the current administration in order to keep the country afloat.
“As you know, I have been honest with you since the current economic problems started. I would like to repeat: we have serious challenges. Things have been tough since the beginning of the year and they are likely to remain so till the end of the year. We have serious challenges but we also have strengths and if we do the right things we can keep a steady course and emerge out of the current situation,”

“As a result of the 50 per cent decline in oil revenues, the country has faced a difficult cash crunch and the federal government has focused on keeping the economy stable and the government running through a series of measures,” she said.
According to her, ”We have front-loaded the borrowing programme to manage the cash crunch in the economy,”, adding that out of the N882 billon budgetary provision for borrowing, the government has borrowed N473 billion to meet up with recurrent expenditure, including salaries and overheads
“Traditionally the first part of the year witnesses low revenue because tax receipts come in from the middle of the year. This has compounded the challenges caused by the steep drop in revenues due to the oil price fall.
“As a consequence of the revenue challenges, there has been no capital budget release so far this year. In spite of this challenge, government has managed to keep the economy stable to the point that the Nigerian economy which is projected to grow by 4.8 per cent this year is according to respected analysts is doing much better than many other oil producing countries
“One positive feature despite the clear challenges is the fact that food prices, though inching up are still quite stable. Also inflation is still in single digits. This has helped to reduce some of the pressure that Nigerians are going through
“We also have the advantage the we are an asset rich country and that is a definite strength.
“ It is a challenging time and requires daily, weekly and monthly management to keep the country going and that’s what we have been doing,” she said



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