Buhari Presents 2020 Appropriation Bill to NASS on Tuesday
As Senate Increases Estimated Expenditure of FG from N10.002 to N10, 729.
Maintains Exchange Rate at N305/$, adopts $57/ Barrel as Crude Oil Benchmark Price for 2020
Decreases Budget Deficit from N1.7 Trillion to N1.5 Trillion
As Senate Probes the e-collection stamp duties domicile with CBN for the past years
Calls for Holistic Probe of NNPC to ascertain the Actual cost associated with Joint Venture Agreements
To carry out Immediate Amendment of PSC Act
ABUJA- THE Senate on Thursday ignored comments, contradictions raised by some Senators and passed the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) that was forwarded to it byb President Muhammadu Buhari for subsequent consideration and passage.
The passage of the documents was sequel to the presentation of the report of Committees on Finance and National Planning on the 2020-2022 MTEF/FSP Documents.
Meanwhile, the President of the Senate, Senator Ahmad Lawan has disclosed that President Muhammadu Buhari will on Tuesday present the 2020 Appropriation Bill before a joint session of the National Assembly.
President Buhari presented the 2018 Appropriation Bill before the Joint session of the National Assembly November 7, 2017 while that of 2019 was presented December 18, 2018
Recall that the Senate had last week, 28th September, received the documents from President Buhari and later forwarded to Senator Solomon Olamilekan Adeola, All Progressives Congress, APC, Lagos West led Committee on Finance to work on and report back to the Senate at Plenary.
The Upper Chamber adopted the entire Sixteen recommendations that were raised by the Committee.
The Senate has however increased the total expenditure of the Federal Government from N10.02 trillion to N10.729.4 trillion, just as it adopted 2.18mbpd as daily production output in 2020, adding that the decision was taken In view of concerted effort by the Nigerian National Petroleum Corporation, NNPC and security agencies, the menaces of oil theft and vandalization.
According to the Senate, it became imperative to jerk up the Expenditure of the Federal Government because the Committee had observed during the public hearing on the 2020-2022 MTEF & FSP, that the salaries and remunerations for the proposed recruitment of 30,000 personnel in Police, Army, Immigration and Civil defence was not captured.
The Senate also adopted $57/barrel as crude oil benchmark price for the fiscal year 2020, even as exchange rate of N305/$ was maintained for economic stability while more work should done by the Minister of Finance, Zainab Ahmad and all economic advisers and her team on improving the economic growth by increasing the GDP and reducing the inflation rate to single digit.
The Upper Chamber also approved that the sum of N557.4 billion from the revenue increment of NCS be used to reduce borrowing by N200 billion and increase capital expenditure thereby decreasing the size of the budget deficit from N1.7 trillion to N1.5 trillion and also increase the total capital available to MDA by N357 billion, from N1.01 trillion to N1.367 triilion.
Also adopted is tha “the saving on income accruing from the increase of the benchmark amounting to N172 billion which represent the Federal government potion of the $2 added to the benchmark be used to pay salaries and emolument of the proposed 30,000 new employees.”
In adopting the report, the Senate has also called for a holistic investigation of the Nigeria National Petroleum Corporation, NNPC, with a view to ascertaining the actual cost associated with the Joint Venture Agreements.
The Senate has also resolved to carry out a proper investigation on the e-collection stamp duties domicile with Central Bank of Nigeria for the past years as that would show probity and accountability and of course increase the revenue base of the country.
The Senate has also agreed to immediately begin the amendment of the National Assembly Actbob Production Sharing Contracts, PSC with International Oil Companies, IOC.
Also adopted in the report presented was that the Debt Management Office, DMO should put more efforts and strategies in managing the foreign and local debts and that more Government Owned Enterprises budget be added to the nation’s budget to ensure proper checks and balances among all Federal Government agencies.
Earlier in his presentation of the report, Senator Olamilekan Adeola said that in the findings of the Committee, ” Crude oil receipt account for over 50% of Federal Governemnt revenue and about 90% of Nigeria’s foreign exchange earings. Therefore crude oil production and export will continue to have important implication on Federal fiscal operation. Over the last 3 years crude production average 1.92mbpd however, fouow’mg consultations with stakeholders crude oil production is estimated at 2.18mbpd, 2.2mbpd and 2.3mbpd in 2020, 2021 and 2022.
“It is noted that oil prices has generally been rising since April 2016. Bonny light crude oil price rose from an average of $43 per barrel in 2016 to $56.2 in 2017 and $72.1 in 2018 partly due to geographical tensions. In 2019, bonny light crude oil price increased steadily from January average of $60/barrel a six year high well above $70/barrel between April and May 2019. It is noteworthy, that volatllity of crude all markets and fluctuating price requlres constant revlew and forcast.
“The non-oil revenue for 2020, 2021 and 2022 is budgeted to be as follows: N1,836,693,720.000; N2,205,807,930,754 and N2,337,091,481,680 respectively.
“The Committee observed during the public hearing on the 2020-2022 MTEF & FSP, that the salaries and remunerations for the proposed recruitment of 30,000 personnel in Police, Army, Immigration and Civil defence was not captured.
“That the total VAT proposed in the 2020-2022 MTEF/FSP amounting to N23 trillion can be realized only after the amendment of the Finance bill is passed into law by the National Assembly. The Committee frowns at the attitudes of CBN for the under disclosure of the e-collection of stamp duties.
“Also noted 10 Government Owned Enterprises(GOEs) budget will be presented along with the National Budget:
“These GOES include FAAN, NCAA, NlMASA, NPA, NAMA, Shippers Council, NDIC, NCC e.t.c.
“The Committee observed that the activities of NNPC as it relates to cost of production is shrouded in secrecy, the direct deduction of cost from revenue without recourse to relevant agencies of government is unacceptable.
“The Committee observed that the exchange rate of N305/$ is maintained over the past three years. Also noted that the GDP growth rate is currently standing at 2.93% and an inflation rate at 10.81%
“That most of the revenue generating agencies have failed to comply with relevant extant law of the Fiscal Responsibility Act which stipulates payment of 80% of Operational surpluses to the Consolidated Revenue Fund.
“The Committee observed that the Federal Government is stepping up investment in health and education to fill the skills gap in the economy, and meet the international target set under the UN’s Sustainable Development Goals (SDGs). The Federal Government is earmarking 1% of the Consolidated Revenue Funds to finance the Basic Healthcare Provision Fund to be classified as Statutory Transfer. Federal Government beliefs that investing in people is a core objectives of ERGP. Government is taking steps to enhance human capital development particularly in health, education and social intervention programs in other to reduce poverty.
“Based on the joint lMF-World bank debt sustainability framework which has a Debt/GDP threshold of 56% for Countries in Nigeria’s Peer Group, Nigeria’s debt is expected to remain sustainable within the MTEF period. This implies that Nigeria Debt/GDP ratio of 19.39% can afford it to expand its borrowing limits. As at 31st December, 2018 Nigeria public debt stock is valued at N24.387 trillion ($79.436 billion). rising at an average of 12.24% per annum. With regard to 2020 fiscal year, the estimated budget deficit is N1.70 trillion and it will largely be financed through borrowing as it has been the tradition while also additional financing of N252.08 billion will be derived from Privatization Proceeds and N328.13 billion from loans secured for specific developmental projects. The Committee further observed that Nigeria’s current debt profile is not alarming as expressed in some but within the threshold of 3% as contained in the Fiscal Responsibility Act.”
Earlier in his contribution, Senator Gabriel Suswam, PDP, Benue North East said, “There are issues with the Medium Term Expenditure Framework as presented by Solomon..
” Let’s take page 12 item 12 based on the IMF sustainability framework which was a debt threshold .Mr. President, there is a problem with this because, the debt profile of the country is N24trn.
“We take ourselves and compare ourselves with these small countries that live on contributions from donor countries and say that our debt sustainability profile should be moved to 56 per cent.
” The fiscal responsibility Act provide for at per cent as a threshold, currently, we are about 19 per cent. If you now give an excuse for is to continue to pile up debts, it means that this will not be sustainable.
“The committee on finance should critically examine this. I think this document was presented by the Ministry of Finance and they are comparing Nigeria probably to countries in Sudan and saying that our debt sustainability threshold should be 56 per cent.
“If we continue to borrow, as they have put it here because it is an excuse to move it from 25 which our statutes provide in this country to 56 makes it unsustainable.
” Look at item 15 which is the payment of areas, bearing that Nigeria has 6 joint venture projects outside of the local ones.
“What has happened is that last year 151trn for the payment of the joint cash calls. What this means is that in the joint venture, we are not getting a dime. We’ve expended money on them
“Joint ventures are contracts in partnership with the NNPC on behalf of the federal government. In those JV where six are the major ones, if we are not raising any money and we continue to pay the JCC there is a problem with that are not getting anything out of them to pay the JCC, if we continue in this manner, it means that there is a problem with that. It means that the essence defeated.
“We go into partnership with IOC in order for us to raise money to finance our budget and then, we are not getting anything.
” What we are doing is that we are providing money in the budget for us to pay those joint cash calls, I think this situation is not sustainable.
“The committee on finance should consider this as a very serious issue that we should look into. We cannot continue to invest in joint venture and we are not getting anything.
“Rather, we are providing for appropriation, for us to pay back those money
“We also look at what I raise yesterday on the production sharing contract. Good enough yesterday we agreed to do an amendment.
” These are joint ventures and contracts that we have entered into for us to be able to raise money to finance our budget. Last year which is the current fiscal year we are in N320bn was provided for production sharing contract for us to finance the budget not one dime was gotten from those items.
“This year they are providing 160bn we will not get a dime, so what is the essence of getting into this production sharing contract which like I said has full component.
“What happened to the royalties, what happened to the taxes, what happened to the profit sharing formula. There is something wrong happening at the NNPC.
“If we entered into contract with the IOCs whether it is joint ventures or production sharing formula and we are not getting even I dime from any of them, to finance our budget. That is the essence of staying in that contracts.
“Committee of Petroleum Upstream and Finance should join hands and make sure that in subsequent years like in 2021, They are providing 320, 320, we will not get in 2022, they have made 420 we will not get a dime, so, I think that these are the items the committee will look into to address the issue of budget deficit.”
On his part, Senator Ibikunle Amosun, APC, Ogun Central said that there was nothing wrong in increasing expenditures, but there must be a corresponding drive to increase revenue, asking where the funding will come from ” if we don’t increase our revenue base. We should talk about diversification of the economy from oil.”
Also in his contribution, the Deputy Senate Minority Leader; Senator Emmanuel Bwacha, PDP, Taraba South said that the report gives a hopeless situation, but as Senators, they have the responsibility to restore hope for the common man, just as he expressed concern over the secrecy in NNPC, the largest revenue earner.
Bwacha who hailed the CBN on stability of the exchange rate, and on debt profile, “There is nothing to worry about if we borrow,but it becomes worrisome when the money ends up in private pocket.”
For Senator Ibrahim Gobir, APC, Sokoto East, there was the need for actual diversification of the economic base.
In his contribution, Senator George Sekibo, PDP, Rivers East said, “We have to work hand in hand to generate money for this nation.”
On his part, Senator Dino Melaye, PDP, Kogi West said, “ICT will help us to fight corruption in oil production. Cited Saudi Arabia, Venezuela. Technology isn’t rocket science. We must work on excess crude oil production. There are projects that government has spent money on without appropriation by the NASS.”
He alleged that Excess Crude Account has been depleted from N670b to N14billion.
In his remarks, President of the Senate, Senator Ahmad Lawan who noted that the passage of the MTEF and FSP would usher in the presentation of the 2020 budget by President Muhammadu Buhari, said that there was the need for the Federal Inland Revenue Services (FIRS) to widen the tax net to generate more revenue for capital expenditure.
Lawan said there was the need for other revenue generating agencies to provide their revenue performances, noting that only that of the Nigeria Customs Service, NCS was indicated in the recommendation, just as he also called for the diversification of the economy from a mono economy via agriculture, solid minerals and tourism.
Lawan said: “Let me say that a lot of all this rests squarely on our shoulders – the National Assembly members. We are supposed to be think of how to generate more revenue.
“Let me also say that we have to task the Federal Inland Revenue Service. The number of Nigerians both individuals and corporate that are in the tax net is still infinitesimal of the entire population.
“I think the FIRS should be tasked by our Finance Committee to widen the net so that more taxpayers are brought into the tax net and that is one way of ensuring that we get more revenue.
“I also believe that we have to diversify the economy like many of us did mention during the debate. Definitely this mono economy is not going to work for this country.
“It has not worked really because we have not been able to put our revenues into the proper form to provide infrastructure.
“We have lost so much ground over the years. Time has come to diversify this economy. Oil is becoming something else. It is not going to be a darling of any one.
“Perhaps, the greatest users of oil will stop even buying the oil. So we need to have an economy that provides jobs for everybody and creates wealth. We have to diversify in the area of agriculture. We have to diversify in the area of solid minerals. We have to diversify in the area of tourism.”Read Full Story