Senate Okays $40 Oil Benchmark for 2021 Budget

By Adedapo Adesanya

The Senate has approved a $40 per barrel oil benchmark for the 2021 budget as it passed the 2021-2023 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The passage of the document followed the consideration of a harmonised report of the Joint Committee of the Senate and House of Representatives.

In his presentation, Chairman of the Senate Committee on Finance, Mr Olamilekan Solomon Adeola, explained that the conference report of the Senate and House of Representatives was a harmonised position of both chambers upon examination of the differences contained in the 2021-2023 MTEF/FSP document.

According to the lawmaker, the joint committee of the two chambers, after due deliberation, advised that the daily crude oil production should be pegged at 1.86 million barrels per day, the benchmark oil price should be at $40 per barrel; the exchange rate should remain at N379/$1; the Gross Domestic Growth (GDP) rate should be at 3 per cent, the inflation growth rate should be at 11.95 per cent, while the federal government retained revenue should be at N7.99 trillion.

In addition, he said the parliament agreed to peg the total federal government proposed expenditure at N13.58 trillion; the Fiscal deficit at N5.60 trillion; new borrowings at N4.28 trillion (including foreign and domestic borrowing); statutory transfers at N484.4 billion; debt service projected at N3.12 trillion; sinking fund at N220 billion; pension, gratuities and retirees benefits at N520.6 billion; total FGN expenditure at N13.58 trillion; while the total recurrent (non-debt) is projected at N5.66 trillion.

It was further stated that the personnel costs for Ministries, Departments and Agencies of Government (MDAs) was put at N3.05 trillion; the capital expenditure (exclusive of transfers) at N3.58 trillion; special intervention (recurrent) was fixed at N350 billion; while the special intervention (capital) was projected at N20 billion.

Business Post understands that oil prices have been bullish with the Brent crude, which is the international benchmark most countries price their crude, rose past the $50 mark this week.

Nigeria’s vital oil and gas industry accounts for around 10 per cent of the country’s GDP, while petroleum export revenue accounts for 86 per cent of the total revenue from exports.