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TITUS ALLI, Abuja
With the plunge of oil prices occasioned by its volatility in the international market, and the need to contain the deadly Coronavirus, the Federal government may be compelled to review the 2020 Budget.
Minister of Finance, Budget and National Planning, Zainab Ahmed disclosing this expressed concern over the dwindling revenue from crude oil sales
We are concerned the current drop in oil price because it’s now below our budget says the Minister after the Wednesday Federal Executive Council (FEC) meeting that was dominated by issues on infrastructure, Aviation and implementation of the 2020 budget
In view of the volatility in the oil market, the government will continue to rejig strategies for implementation of the budget
The 2020 budget was predicated on crude oil bench of $57 per barrel and daily production capacity of 2.1m barrels.
The Minister, however, expressed happiness that oil production has remained stable at over 2m barrels production capacity per day
“I am glad to inform you that our oil production as at today is two million barrel per day and at times slightly higher. That in its self will be a cushioning effect for us”, adding that “We just had an impact on revenue.
“We are concerned because it does have an impact on revenue. The current crude oil price of $53 a barrel is below the budget benchmark.
“So what we are doing is studying the situation and when the budget was passed, we committed to doing a midterm review.
“We will do the midterm review and if the revenues are so significantly affected we will have to do some revisions by way of budget adjustment.
“We are not taking any measures now until we have a reasonable period within which we make a review and then we may need to do an adjustment to the budget through working together with the National Assembly.
This is just as the Minister revealed that the Council approved the memo for the issuance of Sovereign guarantee for the Ajaokuta- Kaduna- Kano has pipeline.
“Councils approval for the issuance of sovereign guarantee to the tune of 85% of the engineering, procurement and construction, or EPC, contract for Ajaokuta-Kaduna-Kano project. This is not a new contract. It was previously approved in 2017 in the sum of 2.89b.
“But the memo we took today is at a revised cost of 2.59, equivalent to a 10% discount of the original sum.
Recall that the government had awarded the previous contract on a contractor financing model.
But the Minister said the contract that has been approved today is an EPC lump sum contract with the NNPC required to pay 15% of the contract amount while the 85% would be provided by Sinosure of China in the form of a loan facility with a sovereign guarantee.
“This is a facility that has an interest rate of libor plus 3.7% with a 12 year repayment period and a 3 year moratorium.
“We have done an extensive review of this project and we are satisfied that the cash flows from the Ajaokuta-Kaduna-Kano gas pipeline will be sufficient to repay the facility.
“This project is one of the cardinal policies of this administration and it is very strategic to national development”
The Minister, however, did not say when the project will eventually take off , but said the timeline for the project will be revealed when it is formally signed.
Minister of State for Works and Housing, Abubakar Aliyu, disclosed that the Federal Executive Council FEC approved N6.6b for the rehabilitation of the 1.76km Muritala Mohammed In Lokoja, Kogi State to rehabilitate the dual carriageway and bridge protection works.
FEC also approved the procurement of bird deterrent/ resistance equipment for the Kano, Enugu and Port Harcourt airports.
Aviation, Minister, Hadi Sirika, said the procurement of bird deterrent equipment is for safe operation at the three airports approved at the cost N538.1m.
Health Minister Osagie Ehanire said federal government approved N935m for the battle of Coronavirus
The who briefed on the Coronavirus, said “We are still working to further improve the system
He disclosed that the government has so far renovated over 4,800 Primary Health Care facilities are now fictional, as against the less than 2000 that were operational before the advent of this administration.
“The aspiration is to redesign the centres to function 24 hours. Staff quarters, equipped with water, 3kva generators and solar equipment.
BADEJO ADEMUYIWA has 23 years experience as a Finance Writer, specialising in Insurance and Investigative Reporting.
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