The Senate has adopted a recommendation to slash the 2020 Budget in response to a fall in the crude oil prices.
But cuts to the N10.5 trillion budget would only work on modalities jointly agreed by both the legislature and the executive.
Senate Joint Committee on Finance, Appropriations, National Planning and Petroleum Resources (Upstream) presented its report spelling out a need to “monitor and examine” the current economic reality caused by sharp drop in the price of crude Oil, the pandemic of Covid-19 and the uproar within the OPEC Community.
The committee, chaired by Senator Solomon Adeola (APC, Lagos) was constituted last week to interface with the relevant stakeholders in the executive and business community with the intention of bringing out suggestions, solutions and way forward out of the present economic reality.
Citing the committee’s findings, the lawmaker said the effects of the sharp drop in the crude oil price would be felt with the effect from May, June and July.
The report said the revenue-generating agencies must be alive to their responsibility in line with the Fiscal Responsibility Act passed by the National Assembly and other relevant laws of the National Assembly.
Senator Adeola said the committee, at its inaugural meeting with Finance Minister, Zainab Ahmed, discussed issues bordering on the current Appropriation Act 2020; cost of production of a barrel of crude oil; loss of revenue as a result of gas flaring which runs into several billions of dollars; Devaluation of Naira; Removal of oil subsidy.
“The short-term solution is to address the sharp drop in the crude oil price which is creating difficulties in funding the 2020 Appropriation Act as passed by the National Assembly,” he said.
“The long-term solution discussed is the need to consider and pass the Petroleum Industry Bill (PIB), which is yet to laid before the National Assembly. This will address the issue of cost of production and Gas flaring where the country’s resources is going down the drain and other issues that might affect the petroleum sector.”
Experts, according to the report, believed that it is time Nigeria should start to look beyond oil as a major source of revenue and ensuring proper diversification of the economy.
“Experts noted that our shallow policy in Agriculture is responsible for our dependency on oil as our major source of income. The Government should show more commitment in returning the country as a major leader in agricultural produce both within and outside the African Continent e.g Nigeria was the leading producer of cocoa but as over taken over by Ivory Coast as number one producer, since the advent of crude oil,” it said.
On the issue of budget implementation, the report said the federal government had commenced relevant releases ranging from Personnel and Overhead Cost while Capital releases for the first quarter commenced by second week in March with the sum of N340 billion to be released to the critical sector.