News As Reps To Engage OICs Over N1trn Cash Call On Oil Joint Venture

 

News on our news desk has it that the House of Representatives on Wednesday unveiled plans to engage Nigerian National Petroleum Corporation (NNPC) and oil major marketers involved in the joint venture (JV) with the view to review the annual N1 trillion production cost.

We gathered that the move was part of efforts geared toward restructuring the N6.08 trillion Appropriation Bill presented by President Muhammadu Buhari to the joint session of the
National Assembly.
President Buhari had during the formal presentation of the N6.08 trillion budget proposal to the joint session of the National Assembly, emphasised the need to fund the N2.2 trillion budget deficit through external and domestic borrowings.
Abdulmumin Jibrin, Chairman, House Committee on Appropriations, who spoke with legislative correspondents in Abuja, confirmed that the $3.5 billion World Bank/African Development Bank facility being sourced by the Federal Government was part of the 2016-2018 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) approved by the National Assembly.
“One very important aspect that swallows a large chunk of the money in the budget is the cash call and production costs. Many people take their eyes away from production costs, but it is critical, this because every year we pay an average of N1 trillion as cost of production,” he said.
“So, it is important that this time around, we need to sit with relevant authorities in the oil and gas sector to see the details of this production cost, to ensure the country is not just being short-changed and we just mopping a lot of money from the first line charge just to give to our foreign ‘’partners,” Jibrin said.
Jibrin assured that the House would engage respective agencies involved in National Planning, Budget and Finance on some key issues relating to the budget proposal as from February 11, considering the need to redirect the budget to agriculture and solid minerals sectors in tandem with the diversification policy.
“We are not celebrating that much that the budget is about N6 trillion, what we would have loved to see is for retirement expenditure to be reduced and that portion that is reduced from the recurrent expenditure is added to the capital component. What we have now is that the recurrent as increased as the capital is increasing.
“Also, there is the issue of financing the budget deficit, we are also concerned about this in the House. So in the next few days, we are also going to engage the Executive particularly the Minister of Finance and the Minister of Budget and Planning, so that we can really be sure how the deficit is going to be financed.
“Generally, the belief of the National Assembly is that we have to reduce domestic borrowing significantly, we expect that a chunk of the borrowing should come from external sources. Already, the economy is struggling and when you now put so much weight on the local economy in terms of drawing more money, it will do much harm to the economy, so we are going to push more harder that we get more money external sources.
“But more importantly, within this period we have to be sure by engaging the executive how and where they are going to get funds because it is important that we pass a budget that the executive will be able to implement,” he said.