â€¢Â Udoma explains intensification of oil exploration
By Ndubuisi Francis in Abuja and Obinna Chima in Lagos
The Federal Account Allocation Committee (FAAC) disbursed N3.010 trillion to the three tiers of government between January and June this year, figures compiled by THISDAY have shown.
The amount shared by the three tiers of government was significantly higher, compared with the N2 trillion allocated to them in the first half of 2016.
A breakdown of the disbursement gathered by THISDAY showed that the federal government received N1.216 trillion from FAAC in the first half of 2017, higher than the N854 billion it was allocated in the comparable period of 2016.
While the states received N798 billion in the first six months of 2017, also higher than the N701 billion in the comparable period of 2016; local governments got N599 billion in the first half of 2017 from FAAC, higher than the N429.4 billion they received between January and June this year.
THISDAY findings also showed a general increase in the revenue shared by the three tiers of government.
A further breakdown of the monthly allocation in the first six months of the year showed that while FAAC disbursed N514.15 billion to the three tiers of government from the revenue generated in January 2017, the Committee disbursed N466.93 billion to the three tiers of government from the revenue generated in February 2017.
Also, while from the revenue generated in March 2017, FAAC shared N496.39 billion, from the revenue generated in April 2017, N418.82 billion was also disbursed to the three tiers of government. In the same vein, the FAAC disbursed N462.36 billion to the three tiers of government from the revenue generated in May 2017 and N652.229 billion for June.
The improved crude oil production recorded by the country recently is the major factor responsible for the increased FAAC allocation to the three tiers of government.
Nigeriaâ€™s oil production recently rose from 1.2 million barrels per day to about two million barrels per day.
This saw the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers, led by Saudi Arabia and Russia, approving the decision of the federal government to cap Nigeriaâ€™s oil production at a sustainable volume of 1.8 million barrels per day.
Udoma Explains Governmentâ€™s Intensification of Oil Exploration
In the meantime, Nigeriaâ€™s Minister of Budget and National Planning, Senator Udoma Udo Udoma, at the weekend in Lagos said the federal government was aware of the diminishing long-term prospects of crude oil, explaining that this was why it was important to maximise the use and exploitation of the nation’s petroleum resources now.
Udoma stressed that this was also why the government was determined to move away from exporting raw crude oil and instead to encourage local refining and processing, as well as the local production of the various derivatives from crude oil for which there will continue to be domestic and international demand.
He spoke during an interactive session with civil society organisations and private sector players on the 2017 Medium Term Economic Framework (MTEF) and Fiscal Strategy Paper (FSP) and said the government was considering total oil production volume of 2.3 million barrels per day with an oil price benchmark of $45 per barrel for the 2018 budget.
He said the government was targeting revenue generation of N5.16 trillion for 2018 as against N5.08 trillion in 2017. The amount would be generated from oil revenue estimated at N2.1 trillion; non-oil revenue of N1.36 trillion; dividend from Nigeria Liquefied Natural Gas -N29.58 billion, and minerals and mining â€” N1.06 billion.
Others are independent revenue from agencies of government â€” N847.9 billion, domestic recoveries and fines â€” N364 billion, other federal government recoveries â€” N138.43 billion and grants and donor funding â€” N281.6 billion.
He said the budget would also be predicated on an exchange rate of N305/$ as well as 12.42 per cent inflation rate.
Other budget benchmarks which the minister stressed that might also be adjusted included nominal GDP of N133.97 trillion and N81.60 trillion nominal consumption.
He explained: â€œThe MTEF outlines the federal governmentâ€™s fiscal policies and our macroeconomic projections for the next three years from 2018 to 2020 and it provides the broad framework for the 2018 budget.
â€œIn line with the goals of the Economic Recovery and Growth Plan (ERGP) 2017-2020, the medium term fiscal policies of government will be directed at achieving macroeconomic stability, accelerating growth, intensifying economic diversification and promoting inclusiveness.
â€œThe need to look onwards to boost non-oil revenues cannot be overemphasised, as we diversify.
â€œWe are on track to achieve full recovery and return firmly to the path of growth. Fiscal prudence must be observed at all levels of governance.â€
He said the MTEF and FSP were drawn from the Economic Recovery and Growth Plan (ERGP) 2017-2020, which is the blueprint guiding all the economic plans of the government.
The ERGP, the minister stated, was itself the product of extensive consultations with a broad spectrum of Nigerians, including development experts, top economists and other critical stakeholders, adding that all budgets prepared within the planned period must be drawn from, and align with the provisions of the ERGP.
During the interactions, he explained the basis for the key assumptions and macroeconomic framework contained in the proposed MTEF, particularly the projections for oil production levels, crude oil price benchmark, exchange rate, inflation rate and GDP growth rate, among others.
These, Udoma noted, were all being exposed for consideration and discussion purposes, and welcomed comments and suggestions on them.
He said the consultations, which started penultimateÂ ThursdayÂ with the governors, and continued last Tuesday andÂ ThursdayÂ with the National Assembly, CSOs, private sectors operators (PSOs), the media and general public in Abuja, were for the purpose of seeking public input into the preparation of the MTEF as recommended by the provisions of the Fiscal Responsibility Act.
The minister explained that though government’s plan, as set out in the ERGP, is to diversify the economy as soon as possible away from reliance on crude oil proceeds, “we need the revenues from crude oil to fund the necessary infrastructure investments that are required to provide the enabling environment for the diversification of the economy into agriculture, manufacturing, construction and services”.
Udoma stated that the production level of 2.3 million barrels per day (mppd) projected for 2018 is realisable, adding that the country has the technical capacity to produce much more than that.
From available statistics from the Nigerian National Petroleum Corporation (NNPC), he stated that with the inclusion of current condensates production of 400,000 to 450,000 barrels a day, “we have been able to produce more than two million barrels a day at some periods this year”.
Addressing concerns raised over the level of borrowing and the continued provision for a deficit in the budget, the minister, while appreciating the concerns about the growing debt figures, explained that the issue was not so much about debt problem, but much more of a revenue problem.
According to him, even with the current levels of borrowing, the countryâ€™s fiscal deficit is still well within the three per cent threshold prescribed by the Fiscal Responsibility Act, adding that government was continuously monitoring the deficit level to ensure that it remains within the threshold.
The minister also admitted that it would be very challenging to achieve the target GDP growth rate of 4.8 per cent set out in the ERGP for 2018.
However, he emphasised that it could be achieved if the country is able to attract a high amount of private sector investment to drive economic growth.