Indications emerged Wednesday that Federal government may review the 2020 budget on the backdrop of the current dwindling crude price in the international market.
Minister of Finance, Budget and National Planning, Zainab Ahmed dropped the hint while briefing State House Correspondents after the weekly federal Executive Council meeting presided over by President Muhammadu Buhari.
The Minister expressed concern over the dwindling revenue from crude oil sales
We are concerned in the current drop in oil price because it’s now below our budget.
BusinessDay checks revealed that issues around infrastructure, Aviation and implementation of the 2020 budget featured prominently at the weekly FEC meeting.
Inside Cabinet sources had informed BusinessDay that efforts will continue this week to rejig strategies for implementation of the budget following the high volatility in the world crude oil market.
This followed pressures on the economy occasioned by the falling price of crude oil in the global market
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 remain 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 government had awarded 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 carriage way 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 safety operation at the three airport approved at the cost N538.1m.
Health Minister Osagie Ehanire said federal government approved N935m for the battle of Corona virus
The who briefed on the Corona virus, said “We are still working to further improve the system
He disclosed that 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 centers to function 24 hours. Staff quarters, equipped with water, 3kva generators and solar equipment.
Tony Ailemen, Abuja
