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FG discloses how it will finance N5.36 trillion budget deficit

FG intends financing the N5.36 trillion budget deficit through domestic, foreign loans and proceeds from privatisations. 

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Federal Government of Nigeria has said that it would finance the N5.36 trillion budget deficit through domestic, foreign loans and proceeds from privatisations.  This was disclosed by the Minister of Finance, Zainab Ahmed after the Federal Executive Council meeting on Wednesday.

The Minister told Reuters that the cabinet approved a revised budget of N10.52 trillion at the meeting, against the N10.59 trillion approved earlier. Ahmed added that expenditures related to COVID-19, which was not included in the budget, has been added to it.

The revised budget, which requires the approval of the National Assembly, was based on assumption that crude oil price would be at $25 per barrel, the output of 1.94 million barrels per day and an exchange rate of N360 to $1.

Meanwhile, it appears the government has changed its mind over budget reduction, as it acted differently from what it said about two months earlier. The finance minister had said in March that the N10.59 trillion budget would be reduced by 15% due to the global oil prices crisis, which is about N1.58 trillion. But Ahmed announced only a reduction of N71.5 billion only.

READ ALSO: Buhari administration on track to double Nigeria’s fiscal deficit

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She told Reuters that the deficit would be part-financed with loans from the International Monetary Fund (IMF). the World Bank, Islamic Development Bank and Afrexim Bank.

Meanwhile, Nairametrics had reported when the Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh urged the government to stop financing budget deficit every year with borrowings from foreign and local loans. According to him, it would be best for the budget deficit to be funded by proceeds from the sale of moribund national assets.

Okoh, who stated this during an interactive session between his agency and the Senate Committee on Privatisation said that there were national assets that could be converted into a liquid for that purpose instead of taking foreign and local loans.

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READ MORE: Zenith Bank’s Profit Before Tax Rises by 3% to N58.7 billion in Q1 2020

“It is not good to keep on borrowing on a yearly basis to finance deficit budget when a lot of very valuable national assets are lying fallow and moribund. Proceeds from outright privatisation or concession of the moribund assets should serve as the best alternative in funding yearly budget deficits since the assets are more or less becoming national liabilities.

“There are about 600 state-owned enterprises in the country which gulp not less than $3 billion on a yearly basis with little or no returns into the public purpose,” he said.

 

 

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Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

2 Comments

2 Comments

  1. Uche uche

    May 14, 2020 at 7:21 am

    Taking loans with no sustainable source of income is irresponsible for anyone including Nigeria. It’s time to slash the budget by 50% since that’s the approximate percentage that us recurrent expenditure and consolidate alternative sources of revenue. From previous experience privatisation has never yeilded significant positive results in Nigeria. So if this is the plan Nigerian government has … it’s so sad.

  2. Funke

    May 14, 2020 at 7:30 am

    I think the article headline should be better put as, Nigeria is Broke, Announces sellout plans

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Energy

NNPC says local operators must improve capacity to achieve low cost of oil production

The NNPC has mandated local oil companies to improve capacity to so as to reduce oil production cost.

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NNPC unveils covid-19 contacts tracing app, marketers to buy petroleum products online

The Nigerian National Petroleum Corporation (NNPC) has said that indigenous companies operating in Nigeria’s oil and gas sector must upscale their capacity for global competitiveness in order to achieve the target of reducing the cost of oil production in Nigeria on a sustainable basis.

This was disclosed by the Group Managing Director of NNPC, Mallam Mele Kyari, at a virtual stakeholder’s consultative summit which was organized by the Senate Committee on Local Content.

According to a press release by NNPC, which was signed by its Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, the NNPC GMD said that there was need to amend the Local Content Act to reflect current realities in the industry.

Kyari, who was represented by the Group General Manager, Corporate Planning & Strategy (CP&S), Mrs Eyesan Oritsemeyiwa, argued that there was a need to have a legislation to resolve the issues of funding challenges faced by local players, stressing that oil and gas business required high technical skills and competence to compete favourably at the global stage.

Speaking further on the need for greater capacity building on the part of indigenous companies, the GMD said the nation’s education system has a great role to play in the development of highly skilled technical manpower, adding that any legislation on Nigerian content development that fails to embrace issues of investment in the educational system was not likely to achieve much.

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He said, “In terms of the interaction between industry and education, we think these new bills would present a good model that we should work with. People are the greatest assets of any nation. If you have the best brains in the industry today, as long as you are not getting a good replacement for them from the educational sector when they grow old and retire, then your industry will collapse.”

The NNPC boss pointed out that the nation has made some good progress from the era when there was no single indigenous operator in the oil and gas industry to the current situation where local operators have risen to double digits, stressing that the trend should be encouraged.

He praised the National Assembly’s initiative to review and amend the Local Content Act and urged the committee to ensure that it is carried out in a timely fashion in order for the law to deliver maximum value for the nation.

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The GMD commended the legislators for the plan to extend the local content law beyond the oil and gas industry to other sectors of the nation’s economy, stressing that it would open up the non-oil sectors to growth and development.

The local content initiative has been identified as being very critical to the development of Nigeria’s oil and gas sector as the Federal Government plans to reduce the cost of production of crude oil to $10 per barrel in the face of the recent crash in crude oil prices.

The Federal Government has provided the sum of $350 million as the Nigerian Content Intervention Fund to help support local participation in the oil and gas sector.

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Energy

NNPC signs gas development and commercialization deal with SEEPCO

NNPC and SEEPCO have signed a gas development and commercialization deal.

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FG to give up majority stakes in its 4 refineries, to be privately managed, NNPC, Pipeline Vandalism: Stakeholder collaboration, critical to tame menace - Kyari, Nigeria explains when it will fully comply with OPEC+ output cut

The state oil giant, Nigerian National Petroleum Corporation (NNPC) has signed a gas development deal with Sterling Exploration and Energy Production Company (SEEPCO).

The agreement between the 2 oil firms is for the development and commercialization of gas from Oil Mining Lease (OML) 143 that could help reduce gas flaring in the country.

The disclosure was contained in a press statement that was issued by the Group General Manager, Group Public Affairs Division of NNPC, Dr Kennie Obateru, on Saturday, September 26, 2020, in Abuja.

According to the statement, the Group Managing Director of NNPC, Malam Mele Kyari, while speaking at the agreement-signing ceremony which held at the NNPC Towers, described the execution of the deal as a great milestone as well as a testament to NNPC’s commitment to facilitating the nation’s transformation into a gas-powered economy.

Kyari disclosed that the deal would not only help reduce gas flaring and its environmental hazards but would also promote gas production and utilization in the domestic market.

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The NNPC boss also commended SEEPCO for its unwavering commitment to gas development and commercialization in the country which has led to the establishment of a Special Purpose Vehicle that will help expand gas utilization in the country as a cleaner, cheaper and more reliable alternative form of energy.

On his part, the Chairman of SEEPCO, Mr Tony Chukwueke, described the deal as an essential partnership that would help the company fulfil the pledge it made to support the efforts of the Nigerian government to eliminate gas flaring by monetizing it.

He commended NNPC and the Group Managing Director for ensuring the execution of the agreement which he described central to the achievement of the company’s cardinal objective of boosting the production of Liquefied Petroleum Gas (LPG), condensate and dry gas for the Nigerian market, adding that the company has invested about $600 million for that purpose.

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This is coming at a time when the Federal Government is shifting focus to gas utilization as an alternative source of energy especially with the increase in the retail pump price of petrol. This is one of the various initiatives by the government as represented by the NNPC towards providing alternative sources of energy.

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Energy

Buhari reappoints 3 Chief Executives of agencies under Federal Ministry of Petroleum

3 Chief Executive Officers of agencies under the Federal Ministry of Petroleum Resources have been reappointed.

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BREAKING: President Buhari retains portfolio as Petroleum Minister

President Muhammadu Buhari has renewed the appointment of 3 Chief Executive Officers of parastatals under the Federal Ministry of Petroleum Resources with immediate effect.

The appointments that were renewed by the president include that of Dr Bello Aliyu Gusau as the Executive Secretary of Petroleum Technology Development Fund (PTDF), Ahmed Bobboi as the Executive Secretary/Chief Executive Officer of Petroleum Equalization Fund (PEF) and Simbi Wabote as Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB).

The disclosure was made through a series of tweet posts by the presidency on its official Twitter handle on Friday, September 25, 2020.

The statement disclosed that the renewal of the appointments followed recommendations to the President by the Minister of State Petroleum Resources, Timipre Syla.

It stated that Dr Aliyu Gusau was credited to have run the PTDF successfully in the past four years, keeping faith with the Seven Strategic Priorities he had introduced in January 2017.

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These are Domestication, Cost cutting, Sustainable funding, Efficient internal processes, Linkages with the industry, Utilization of centres of excellence, and Pursuit of home-grown research.

It also stated that Bobboi got his reappointment for having run PEF in a way that made it a key and strategic player in the administration’s oil and gas reforms, especially in stabilizing the supply and distribution of petroleum products across the country, among others.

Going further, it stated that the NCDMB boss, Wabote, won his pips for managing the NCDMB and completing its headquarters building. Wabote was also credited to have initiated many landmark projects that were widely commended by industry players.

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