Budget: Senate settles for $52 oil benchmark

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February 25, 2015

 

Senate President, David Mark

The Senate on Tuesday at an executive session settled for $52 per barrel as the oil price benchmark for the 2015 budget proposal.

This is against the $65 per barrel the executive submitted to the two chambers of the National Assembly in December last year.

A senator, who spoke on the condition of anonymity, confirmed the development to our correspondent on Tuesday.

President Goodluck Jonathan had through three different Medium Term Expenditure Framework and Strategy Papers forwarded to the National Assembly before submitting the entire 2015 budget profile, proposed $77, $73 and $65 as the benchmark price.

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, had presented a national budget estimate of N4.357tn to the National Assembly late last year based on projected oil production of 2.2 million barrels per day.

However, few days after the proposal was submitted to both chambers of the National Assembly, there was a drastic fall in the crude oil prices in the international market, which made the adoption of the $65 benchmark price unrealistic.

The Chairman, Senate Committee on Finance, Ahmed Makarfi, and his counterpart in the Rules and Business Committee, Ita Enang, told our correspondent in separate interviews that the National Assembly did not need the executive to dictate a benchmark upon which to base the budget.

Enang said, “We do not need a revised MTEF/FSP from the executive because of the crash in the oil price in the international market. It is our responsibility to look at the budget vis-a-vis the current market forces and determine an appropriate benchmark.

“In my own opinion, I believe that the benchmark should be fixed at $40 per barrel in line with the prevailing oil price in the international market.”

Makarfi had also said, “It is now the responsibility of the National Assembly to decide whether we will approve the oil benchmark as submitted by the executive or fix a new one. We do not need to wait for another benchmark from the executive before we start work on the budget”

Other senators, who spoke with our correspondent on the condition of anonymity on Tuesday, confirmed that the benchmark had been reviewed to reflect the economic reality on ground arising from the fall in crude oil prices.