As we all know, Rivers State is the second largest domestic economy in the country. Our budget performance is significantly dependent on the developments in the international oil market as Nigeria largely depends on oil revenue for funding of budgets for all tiers of government.
In 2014, the country is said to have lost substantial revenue because of the fall in interna- tional oil price and pipeline vandalism. However, current oil production is 2.39 mbpd against 2.3838mbpd projected in the 2014 budget and priced within the benchmark price for 2014.
This notwithstanding, inflows to the state have substantially been on the decline. For the state, the projected Federal revenues were not realised due to significant reduction from federal inflows under circumstances are not clear to us. With politics dominating this year 2015, the situation may worsen even when the budget targets in terms of oil price and production levels are not met as was in the year 2014.
There- fore the risks are high that as in 2014, the state revenue targets for 2015 are unlikely to be met particularly with fluctuating oil price, therefore affecting budget performance and development. As a key strategic sub-national economy, we are mindful of these challenges.
Our budget estimates will be based on a benchmark price of $40per bar- rel to create a safety net of $5. Going forward, we expect our FAAC and IGR revenue profile in 2015 to be realistic based on our modest projections and the reforms and improvements go- ing on in the Board of Internal Revenue (BIR).
These strategies coupled with strict implementa- tion of the budget are designed to handle these eventualities. Therefore our 2015 budget projected basic working assump- tions shall include a benchmark oil price of $40 per barrel; an es- timated oil production of 2.2782 million barrels per day; Average Exchange Rate of N167 per US dollar, and an inflation rate of 8.2 percent.
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Review of the 2014 budget Revenue Performance (Janu- ary –September, 2014) We projected that the 2014 Budget of N485.524bn was to be funded by FAAC Revenue of N241.903bn; Year 2013 Clos- ing Balance of N10.717bn and Proposed Bond/Loan of N100bn; IGR ofN92.92bn, World Bank/ African Development Bank loan of N6.984bn and Proceeds from Assets ofN33bn. The N241.243bn estimated FAAC Revenue has the following components: • Statutory Allocation (N42.846bn); • 13% Mineral Fund (N130.105bn); • VAT (N18.998bn); • Excess Crude Oil Fund (N21.852bn); • Fuel Subsidy Revenue (N15.80bn); • Others (Refund from Akwa Ibom N6.128bn; Refund from NNPC (N5.514bn);
• Capital Receipts (N0.660bn) Total Revenue Receipts as at the end of September 2014 stood at N281.086 which is 57.89 percent of the year’s revenue budget. Specifically, we have actualised N69.035bn, a 74.30 percent of the IGR Budget of N92.920bn proposed for the year; and N155.550bn (64.48 percent) realised from the FAAC revenue target. This is shown in the table as follows: Revenue budget performance as at September 30, 2014 Statutory allocation fetched N32.245Bn or 75 percent of ex- pectation; mineral Fund N98.8bn or 75 percent of expectation, Value Added Tax N10.36bn or 47 percent, Excess crude oil fund ar- rears N10.5bn or 66 percent, pro- posed local credit N56.5bn or 56.5 percent, fuel subsidy N10.5bn or 66 per cent, IGR N69Bn or 74 percent, other refunds by NNPC N2.43bn or 43.9 per cent. Total federation allocation isN224.586 or 67.08 per cent while total rev- enue is N281.086 or 57.89 percent (January to September only) out of N485.524bn expected by end of 2014. Further analysis of the rev- enue performance reveals the following: • We have realised 67.21 per-cent of our aggregate revenue target for IGR and FAAC total- ling N224.586bn as at September, 2014 against N334.163bn esti- mated for the entire year. • On FAAC performance, we budgeted N241.243bn for 2014, and achieved N155.550bn, that is, 64.48 percent FAAC Receipts achievement as at the end of the third quarter of 2014. We would have exceeded our mini- mum FAAC Receipts projection of N180.93bn by the end of the third quarter if the Federal Gov- ernment had been more trans- parent in the management of the oil proceeds.
We significantly lowered our benchmarks below Federal levels to have a surplus budget. That purpose was not achieved. • By the end of the third quar- ter 2014, IGR recorded N69.035bn which is 74.30 percent achieve- ment of the IGR budget for the entire year. However, when compared to the third quarter budget of N69.690bn, IGR was 99.06 percent achievement.
This high record of IGR is at- tributed to our modest estimates and the strengthening of the tax collection machinery, the reforms at the Board of Internal Revenue (BIR), tax education and the continued deployment of ICT technology. 2014 budget expenditure as at September Total expenditure By third quarter aggregate ex- penditure budget of N361.893bn, we have recorded 85.93 percent aggregate expenditure perfor- mance having spent a total of N310.966bn both on Recurrent and Capital items by the end of September, 2014.
However, an aggregate budgeted expendi- ture performance of 64.05 per cent was achieved within the first nine months of 2014 when compared aggregate expenditure ofN310.966bn with the overall budget estimates of N485.524bn for the entire year.
Recurrent expenditure As at the end of third quarter of the year under review, we have spent a total of N109.858bn as Recurrent Expenditure. This represents 93.60 percent of the estimated N117.092bn to be spent as Recurrent items by the State for the year.
Salaries and Pension benefits were paid as at when due and our Overheads were released to MDAs promptly and as budgeted. We spent N71.360bn as Sala- ries and N38.498bn as Overhead during the period under review. The significant spending in Re- current items is attributed to the recruitment of more staff in the public service warranting more outflows particularly the pay- ment of salaries to over 13,000 new teachers and the imple- mentation of the Contributory Pension Scheme.
Capital expenditure 2014 Capital Expenditure was estimated at N368.432bn out of a total budget estimate of N485.524bn. The Capital projec- tion for 2014 represents 75.88 percent of the total budget for the year under review. Capital Expenditure releases to MDAs as at third quarter 2014 stood at N201.108bn.
This shows a Capital budget performance of 54.59 percent as at September this year. However, compared to the third quarter Capital Budget of N276.324bn, we have recorded 72.78 percent performance.
Highlights of our achieve- ments Mr. Speaker and Distinguished Members, we had continued to consolidate our achievements over the past seven years with the implementation of the 2014 budget. Much has been accom- plished and even much more would be accomplished.
Governance is a continuum. As stated earlier, we will contin- ue to make concerted efforts to complete our key projects near- ing completion and advance oth- ers to remarkable stages for early completion by the incoming administration. It is gratifying to note that in the implementation of 2014 budget, we have recorded giant strides.
Mr. Speaker, this administra- tion has put in place life chang- ing assets in the state. It is on record that we have generated more employment over the past thirty years than all the previ- ous Governments put together. Within this period we employed over 15,000 new hands into the public service to fill existing va- cancies including professionals like medical doctors, engineers, accountants, auditors, lecturers land surveyors, pharmacists, nurses and other allied medical professionals.
The Mono Rail project might have witnessed seemingly slow implementation from the be- ginning for obvious ‘teething’ issues. However, the project has received highly commendable progress during the period under review and we are committed to laying that solid foundation that would give our people a first class grade transport system.
Mr. Speaker, we are on course in this regard. Over 95 percent of the roads and related works embarked upon by this government have been completed. Our roads are better, stronger and wider than we met them. Our in- vestments in agriculture like the Songhai farms, the fish farms are yielding the desired results; we are a strong partner in the power sector reform project in Nigeria. Our schools are better than we met them in 2007.
The free primary and secondary education is on course. We made significant progress at rebuilding our schools infra- structure. Our yearly scholar- ship programme continues to be sustained. This government through the establishment Ignatius Aj- uru University of Education is turning out more professional teachers to teach at the various schools.
We sustained our free Medicare programme. The new health facilities are functional as they have all been com- pleted. The new hospitals in Port Harcourt are functioning at full capacity and are been professionally managed. Under this government our environment became greener and cleaner across the state. Considerable attention is being given to Port Harcourt and its environs.
