MTEF/FSP: Senate rejects N1.7tr subsidy recommendation, sustains Buhari’s N3.6tr

• Raises oil benchmark from $70 to $73, excises Customs, FIRS, NCC from budget 

By Ikechukwu Okaforadi

Senate has rejected the decision by its Committee on Finance to cut to N1.7trillion  the N3.6trllion proposed for subsidy in the 2023 budget by President Muhammadu Buhari.

Recall that President Buhari had in the 2023 – 2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) forwarded to the Senate, proposed N3.6trillion for fuel subsidy from January to June in 2023.

However, the chairman of Senate Committee on Finance, Solomon Adeola, in a report at plenary on the proposals, recommended N1.7trillion for fuel subsidy for the entire 2023, but it was rejected as the lawmakers retained the N3.6 trillion earmarked for subsidy by the executive.

Senator Olamilekan Adeola (APC Lagos West) led committee’s recommendation for $73 per barrel oil price benchmark for the proposed N19.76 2023 budget was however approved against $70 per barrel proposed by the executive in the MTEF/FSP documents.

Also, the recommendation on excise of 10 out of the 63 Government Owned Enterprises (GOEs) made by the committee was also approved by the Senate.

The affected GOEs are the Nigerian Communication Commission (NCC) , Corporate Affairs Commission (CAC) , Nigeria Port Authority (NPA), Joint Admission and Matriculation Board (JAMB) and Nigerian  Maritime Administration and Safety Agency (NIMASA).

Others are the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), National Agency for Food and Drug Administration and Control (NAFDAC), Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMPDRA).

The recommendation states: “That 10 out of the 63 GOEs be placed on cost of collections  to serve as a test case for other GOEs which can be added in the future.

“The list of these GOEs includes , NCC, CAC, NPA, NIMASA, NUPRC, FIRS, CUSTOMS , NMPDRA, JAMB and NAFDAC with immediate effect through the proposed Finance Bill 2023 coming up with amendment on the existing Act of agencies.

Senator Olamilekan in his presentation , said scenario 2 of the 2023 budget proposed by the executive in the MTEF / FSP document , was adopted by the committee because of lesser vote for budget deficit and over N1trillion for capital votes for the various Ministries , Departments and Agencies (MDAs).

The scenario two has a proposed total expenditure profile of N19.76trillion and deficit of N11.30trillion as against scenario one which has a proposed total expenditure profile of N18.75 trillion with deficit of N12.41trillion and zero allocation for capital projects for the MDAs.

The scenario two proposed recommended by the committee for approval by the Senate and accordingly approved is based on other critical parameters like 1.69million barrel oil production per day , N437.57k exchange rate to a US dollar and 3.75% Gross Domestic Product (GDP) growth rate.

Others are projected inflation rate of 17.16% and new borrowings of N8.437trillion, N6.31trillion for Debt Service, N722.11billion as statutory transfers etc.

Many of the Senators in their submissions before the adoption of the report, expressed their reservations  on the N437 exchange rate to a dollar which according to them gives over N300 difference to the N 730 or N740 to a dollar it is at the parallel market.

Senator Adeola in his response to the reservation, said the committee attempted to increase the exchange rate from N437 to N550 to a US dollar but threaded caution , in avoiding further devaluation of the Naira.

The President of the Senate, Ahmad Lawan in his remarks, said based on observations and findings made by the Committee, Nigeria is a war situation as far as crude oil theft is concerned and also under revenue remittances by many of the MDAs.

“The scenarios proposed are very challenging ones and all hands must be on deck to stem the tide”, he said.

The passed MTEF / FSP documents will be the basis upon which President Muhammadu Buhari will anchor projections and proposals of the 2023 budget scheduled for presentation to joint session of the National Assembly Friday this week.