Senate may raise crude oil benchmark in 2005 budget
From Alifa Daniel and John-Abba Ogbodo, Abuja
THE Senate may have to raise the crude oil benchmark for the 2005 budget, the chairman of its Committee on Finance and Appropriation, John Azuba Mbata, has said.
This, he added, further accentuated by fresh budget proposals coming from the executive this week.
The feelers are that even the executive wants an upward review. But all these, Mbata assured journalists at the weekend, will not adversely affect the December 22 date for conclusion of work on the 2005 appropriation bill. But it may however be delayed at the House of Representatives.
During the presentation of the proposals, President Olusegun Obasanjo said the executive arm prepared it in good time with a view to beginning implementation in January.
Put at $27 per barrel in the 2005 appropriation bill before both Houses of the National Assembly, the oil benchmark, it was gathered may be raised to between $30 and $35 per barrel, even though Mbata told jounalist that he would not want to give a figure except his committee received the report of all the Senate committees and the fresh proposals from the executive arm.
On October 12, President Olusegun Obasanjo presented a N1.6 trillion appropriation bill to joint session of the national assembly. He put the benchmark for oil at $27 per barrel, two dollars above that of the 2004 budget. He put the crude oil production quota at 2.6 million barrels a day.
The aggregate expenditure ceiling was put at N1.618 trillion for year 2005 with a resultant deficit of N314 billion or 2.9 per cent of the Gross Domestic Product (GDP), which would be financed with crude oil savings of N158 billion and proceeds from sale of government property (N19 billion); looted funds N10 billion, capital market funds of about N70 billion.
Afterwards, the Senate and House of Representatives began and extensive scrutiny of the document and invited officials from the executive arm of government to defend the figures to their agencies. Consequently, most committees of both Houses reportedly discovered the need to increase government expenditure port folio.
The Guardian learnt that half way into the deliberations on the budget by the Senate and House of Representatives committees, distortions were discovered which warranted, serious adjustments.
The chairman of the House Committee on Finance, Farouk Lawan, confirmed the development but said the adjustments would be minimal.
"The presidency is bringing an adjustment especially, in the area of personnel cost where we discovered some shortfall, but it will be substantial as to affect the entire budget exercise," he said.
But Mbata said at the weekend that if the expenditure framework was adjusted, it was necessary to look at the revenue to service the expenditure. "The revenue now is predicated on $27 per barrel and also we have revenue from the Customs and Excise duties and the Federal Inland Revenue. It is hard to adjust taxes for now but the one to adjust is oil revenue. If expenditure increases significantly, we may have to increase the benchmark in order for deficit to be at a manageable level because we are quite worried about the deficit level," he said.
Noting that others may not be reliable as shown in the 2004 Appropriation, Mbata disclosed that the best option open was increasing the oil benchmark. "It is likely that the increase is going to be significantly high... we note the volatility in the world oil price mechanism and it is something we need to watch when determining the benchmark so that revenue figures can be reliable to fund the budget," he said.
He confirmed that the National Assembly was aware that the executive arm was tinkering with the earlier presented proposal.
Mbata revealed that the areas that has to be contended with were personnel costs and the funding of on-going projects, among others.
