WORRIED by the drop in the international price of crude oil upon which the 2010 budget is predicated, President Goodluck Jonathan has returned the recently assented budget to the Senate.
He has requested for a structural downward reversal in agreement with the present reality.
Also, Jonathan has sent supplementary budget, which when approved, would accommodate some critical areas which were either inadvertently omitted or under provisioned for in the 2010 budget.
The president, in a letter to the Senate President, Mr David Mark, dated May 29, 2010, but read during the plenary session on Tuesday, June 1, requested for a revision of the 2010 “Fiscal Framework to adjust the oil benchmark price, on which the 2010 Budget is predicated.”
The 2010 budget was projected on $67 per barrel, oblivious of any serious shortfall.
Jonathan is seeking for an amendment to the 2010 budget which would enable the executive to revise “downwards the level of aggregate expenditure.”
The letter reads: “On the expenditure side, it is necessary to revise downwards the aggregate level of expenditure from the N4.6086 billion approved in the 2010 Appropriation Act and adjust the budget accordingly.”
Consequently, he said “I wish to bring to your attention, certain challenges posed by the serious shortfall in projected revenue and the adverse implications this poses for financing the level of aggregate expenditure appropriated by the National Assembly.
“Specifically, recent revenue developments indicate significant shortfalls in both oil and non-oil revenue which may well continue for the rest of the fiscal year, with adverse implications for the financing of the budget.”
He said that given the recent drop in international oil prices from over US $80 per barrel to US$70 per barrel, it was prudent to revise the oil price benchmark to a more realistic level.
On the supplementary budget which he said was necessitated by certain critical items such as “statutory transfer, debt service, the service-wide vote and other critical expenditure heads that were either inadvertently omitted or under provisioned for” would be catered for under it.
Such items include negotiated civil service wage increase, PHCN arrears of monetisation and the 50th anniversary celebration, among others.
Having thanked the Senate for its sincere, assiduous and patriotic efforts at passing the 2010 Appropriation Act, he called on the upper legislative chamber of the National Assembly “to kindly consider and approve these requests expeditiously to resolve these challenges to the 2010 budget.”
Meanwhile, the Manufacturers Association of Nigeria (MAN) has described the proposal to raise fuel price from N65 to N100 per litre as premature by the administration of President Jonathan because of unresolved problems affecting adequate supply and distribution of petroleum products in the country.
The proposal to raise fuel price, according to the recommendation of the National Economic Management Team (NEMT), was reported by a national daily newspaper on Tuesday (not Nigerian Tribune).
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) described the proposal as lacking due process and that it would be resisted by all workers in the Nigerian economy.
President of MAN, Alhaji Bashir Borodo, in a telephone interview on Tuesday, said that the increase in fuel price by the Federal Government would further depress the Nigerian economy. This, he said, was as a result of several challenges, including inadequate power supply, lack of credit to finance business activities, bad roads and the rise in cases of attack by armed robbers in the country.
“Sincerely, it will be premature for the Federal Government to think in the direction of increasing fuel price when we are still finding ways to address challenges facing efficient production of goods at competitive prices required to boost export from Nigeria and foreign exchange earnings of the nation, “ he said.
The General Secretary of PENGASSAN, Mr Bayo Olowoshile, said that hike in price by the government of President Jonathan would be resisted by workers in both the public and private sectors of the economy since it was definitely going to reduce the purchasing power of Nigerians without solutions to the problem of infrastructure. He noted that such a proposal without the knowledge of a committee constituted by the Federal Government was considered by PENGASSAN as an attempt to implement a personal agenda.
“If it is true that the Federal Government has considered the plan to raise fuel price, it is illegal and lacks due process without the input of Nigerian workers. It is a disregard of the existing committee constituted by the Federal Government on downstream petroleum activities to find solutions to dependence on fuel importation,” he said.
Olowoshile added that PENGASSAN had submitted a proposal to the Federal Government that there should be no plan at the moment to raise fuel price and implement deregulation until there was improvement in the local refining capacity.
This, he noted, would avoid a situation whereby petroleum marketers would use the opportunity to exploit Nigerians through high prices that would worsen the purchasing power.
Olowoshile said Nigeria was suffering in the midst of plenty, because crude oil was being produced mainly for export to other countries, though the nation had the financial resources to build new refineries and improve the refining capacity of the existing refineries being operated by the Nigerian National Petroleum Corporation (NNPC).
According to the PENGASSAN boss, “the best advice for President Jonathan will be the suggestion that aims at providing solution to current infrastructure problems before thinking of increasing fuel price to avoid industrial action by workers.
“Anybody telling President Jonathan to raise fuel price is not wishing him well and he should see them as the enemies of the government, workers and manufacturers,” he added.
A newspaper report stated that the Minister of Finance, Mr Olusegun Aganga, convinced President Jonathan about the hike in fuel price at a meeting recently.
However, the market fundamentals of the Petroleum Product Pricing Regulatory Agency (PPPRA) showed that the expected price of Premium Motor Spirit (PMS), otherwise known as petrol, brought into the country as of May 26, as posted on the website is N102.38 per litre.
This has a subsidy input of N37.38 per litre, which is being reimbursed under the Petroleum Support Scheme (PSF) by the PPPRA.
The breakdown shows that a litre of petrol will arrive in the country at a price of N89.18 per litre, after the addition of transportation and port charges. The marketer of the product is given a margin of N13.20 per litre to cover the cost of distribution, supply and marketing at the filling stations.
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