Senate Grills Edun Over Oil Revenue Gaps, N152trn Debt, As Adedeji Blames Unrealistic Budgets for Funding Crisis

* Lawmakers query 18%, 36.5% oil performance shortfalls in past fiscal years

…Finance minister insists security spending prioritised, economy growing at 4%

Sunday Aborisade in Abuja

The Senate Committee on Appropriations on Wednesday sharply interrogated the Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, over persistent oil revenue underperformance and Nigeria’s rising N152 trillion debt burden in the proposed 2026 Appropriation Bill, as Chairman of the Nigeria Revenue Service (NRS), Mr. Zacch Adedeji, blamed unrealistic budgeting for recurring funding shortfalls.

At a tense session chaired by Senator Solomon Adeola, lawmakers questioned the credibility of revenue assumptions underpinning the 2026 budget, warning that significant variances between projected and realised oil revenues in previous years must not be repeated.

Adeola stressed that the document before the committee was prepared by the executive and must stand the test of realism and accountability.

Adeola said: “The challenges contained in this document emanated from the executive, not from us. How do we explain 18 per cent performance on oil revenue in one year and 36.5 per cent in another? 

“Do we reduce this budget or leave it as it is? If we are not reducing it, then you are telling us you will meet the targets.”

The committee chairman demanded clarity on whether the revenue projections presented were for the federation or strictly for the Federal Government, noting that such distinctions were essential for legislative approval and fiscal planning.

He also expressed deep concern over Nigeria’s N152 trillion debt stock and the high cost of servicing it, describing current debt financing costs as “astronomical.” 

Adeola suggested that the executive consider disposing of certain national assets to reduce the debt burden and lower future borrowing costs.

He said: “If some assets are disposed of and used to pay down these debts, we will reduce the quantum of our debt portfolio and reduce what we pay when we borrow again.”

He urged the minister to clearly state whether the executive has full confidence in the assumptions driving the 2026 fiscal framework.

In his response, Edun defended the oil production benchmark of 1.84 million barrels per day embedded in the budget, describing it as a deliberate “stretch target” designed to drive improved output.

“It is a stretch target so that the authorities do not settle for less. But we are careful not to spend what we do not have,” he said.

Edun maintained that forward crude contracts were globally accepted financing tools and structured to ensure that future production met obligations without jeopardising federation revenues.

On security spending, the minister assured lawmakers that emergency funding had been consistently prioritised, including foreign procurement of critical military equipment.

“We all agree that security is a priority. I can assure you that emergency funding has been given. Critical foreign payments for security equipment have been made at least twice this year, including as recently as yesterday,” he disclosed.

Addressing concerns over debt sustainability, Edun argued that Nigeria’s primary challenge was not necessarily its debt-to-GDP ratio but the high pricing of debt for developing countries in international markets.

He revealed that Nigeria was chairing the technical group meeting of the G24, where global experts were deliberating on debt sustainability and rising interest rates.

“The issue is pricing. Developing countries are forced to pay high interest rates in international markets. That is where the difficulty lies,” he said.

Edun noted that President Bola Tinubu had advocated the establishment of an African credit rating agency to ensure fairer assessments and more affordable financing for African economies.

While acknowledging the heavy burden of debt servicing, the minister warned that undermining monetary stability could trigger exchange rate volatility and erode investor confidence.

He told lawmakers that macroeconomic indicators were improving, with the economy growing at about four per cent, inflation trending downward, foreign reserves rising and the exchange rate stabilising. 

He cited renewed investor confidence, including a reported $20 billion investment commitment by Shell and increased private sector participation in infrastructure development.

Edun said the administration aimed to raise total investment to 30 per cent of GDP to achieve annual growth of about seven per cent and significantly reduce poverty, adding that greater private sector involvement would ease pressure on government borrowing.

However, Adedeji shifted the focus to what he described as the root cause of recurrent budget funding challenges, unrealistic revenue assumptions.

“Budget efficiency is not in the quantum of the budget; it is in what you can carry out,” he said.

Using a simple analogy, he warned that planning expenditure on the basis of inflated income projections inevitably created distortions and implementation gaps.

According to Adedeji, “If we think we have 10 naira and plan as if we have 100 naira, we will create problems for ourselves. The starting point must be realistic assumptions.”

He explained that under the Petroleum Industry Act framework, the Nigerian National Petroleum Company now operates as a limited liability company, and government earnings from oil production are limited to taxes and royalties rather than total crude sales.

“The only connection between the government and whatever is produced is the taxes and royalties paid. If production costs are high, the net revenue to the government is affected,” he said.

Adedeji disclosed that projections indicated about 47 per cent of total oil company output would translate into government revenue under current arrangements, underscoring the need for disciplined fiscal planning.