Nathaniel Zaccheaus
The Senate on Wednesday rejected the proposal of its Joint Committee on Finance and National Planning which reduced the oil subsidy payment in the 2023 budget from N3. 6trn proposed by the executive arm of government to N1. 7trn

Chairman of the panel, Senator Solomon Adeola, presented the report of the Senate Joint Committee on Finance, National Planning and Economic Affairs on the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper before the red chamber at plenary.

President Muhammadu Buhari had in the 2023 – 2025 MTEF/FSP , proposed N3.6trn for fuel subsidy from January to June in 2023 .

Adeola said the panel decided to slash the N3.6trn in order to reduce the fiscal deficit of N11.3 trn of government as contained in the MTEF/FSP.

The proposal of his panel on the subsidy was however rejected while other recommendations were approved.

Adeola said, “The Committee hereby recommends that the cost of petroleum subsidy be capped at N3.6trn accordingly.

“All relevant agencies of the governments will be required to take necessary action to keep the petroleum subsidy cost to government within N1.7trn ceiling in 2023 by this action.

“A saving of the sum of N737,306,443,151 will be saved and this should be used to reduce the fiscal deficit of N11.3trn of the government as contained in the MTEF/FSP.

“That the Fiscal deficit of 11.3trn be reduced with the savings from subsidy regime amounting to N737.31bn to N10.563trn.”

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The Committee’s recommendation for $73 per barrel oil price benchmark for the proposed N19.76 2023 budget was however approved against $70 per barrel proposed by the executive in the MTEF/FSP documents.

The panel also recommended daily crude oil production of 1.69million barrel per day, 1.83mbpd, and 1.83mbpd for 2023, 2024 and 2025 respectively, be approved.

It also said the oil price of $73 per barrel of crude oil be approved as a result of continuous increase in the oil price in the global oil market and other peculiar situations such as continuous invasion of Ukraine by Russia as this will result in saving of N155bn.

The panel said the exchange rate of N437.57bn be sustained as contained in the MTEF/FSP document with continuous engagement between the Central Bank of Nigeria and Federal Ministry of Finance, Budget and National Planning with the view of bridging the gap between the official market and parallel market.

It also recommended the projected Gross Domestic Product growth rate of 3.75 per cent be approved.

The projected Inflation rate of 17.16 per cent proposed by the executive was also retained by the panel.

It asked the Senate to approve the projected New Borrowings of N8.437trn (including Foreign and domestic Borrowing), proposed by the executive.

Other parameters recommended by the panel in the 2023-2025 MTEF/FSP document included among others, a retained revenue of N9.352 trn as result of increase in the benchmark as the ceiling oil subsidy to the year in review.

It also included the Fiscal deficit of N11.3trn (including Government Owned Enterprises).

Others parameters approved were, “Borrowings of N8.437trn (including Foreign and domestic Borrowing), subject to the provision of details of the borrowing plan to the National Assembly.

“Statutory transfers, totaling, N722.11bn; debt service estimate of N6.31trn.

“Sinking Fund to the tune of N247.7 billion; Pension, Gratuities and Retirees Benefits of N827.8bn; and Aggregate FGN Expenditure of N19.76 trillion; made up of Total Recurrent (Non-debt) of and N8.53 trn.

The recommendations also included Personnel Costs (MDAs) of N827.8bn; of Capital expenditure (exclusive of Transfers) N3.96trn; Special Intervention (Recurrent) amounting to N350bn; and Special intervention (Capital) of N7bn.

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The Committee recommended significant reduction in both waivers and tax exemptions of corporate organizations to cushion the effect of budget deficit.

The Committee also recommends that all revenue generating agencies should reconcile their accounts with the Fiscal Responsibility Commission and the Office of the Accountant General of the Federation, the report of which should be submitted to the Committee of Finance for consideration and approval.

It said there should be a common electronic platform for reconciliations amongst the government MDAs, OAGF and Fiscal Responsibility Commission for effective monitoring and remittances.

That there should be strict compliance with the Constitution, Fiscal Responsibility Act and other extant laws by all agencies of the Government with regards to revenue remittances.

That the relevant oversight committees of National Assembly are at liberty to remove recycled projects in their budget proposal during the Committees’ budget defense.

It advocated the mainstreaming of annual GOEs’ budgets into the Federal Government budget processes to ensure the same level of scrutiny, procurement and monitoring exercise.

It also said that 10 out of the 63 GOEs be placed on cost of collections to serve as a test case for other GOEs which can be added in the future.

It listed the GOEs includes; Nigerian Communications Commission, Corporate Affairs Commission, Nigerian Ports Authority, The Nigerian Maritime Administration and Safety Agency, and the Nigerian Upstream Petroleum Regulatory Commission.

Others are the Federal Inland Revenue Service, the Nigerian Customs Service,Nigerian Midstream and Downstream Petroleum Regulatory Authority, and the National Agency for Food and Drug Administration and Control, with immediate effect with the proposed finance bill 2023 coming up with the amendment the existing Act of the above mentioned agencies.

Many of the senators in their submissions before the adoption of the report , expressed their reservations on the N437 exchange rate to a dollar which according to them gives over N300 difference to the N 730 or N740 to what a dollar is being exchanged at the parallel market .

Adeola in his response to the reservation, said the committee attempted to increase the exchange rate from N437 to N550 to a US dollar but threaded caution , in avoiding further devaluation of the Naira .

The President of the Senate , Ahmad Lawan in his remarks , said based on observations and findings made by the Committee, Nigeria is a war situation as far as crude oil theft is concerned and also under revenue remittances by many of the MDAs.

He said, “The scenarios proposed are very challenging ones and all hands must be on deck to stem the tide. ”

The MTEF / FSP documents , will be the basis upon which the 2023 budget would be predicated.