TRACKING______A downward review of the N10.57 trillion 2020Appropriation Act is inevitable, the Federal Government said on Monday.
The adverse effects of the Novel Coronavirus (COVID-19) on the economy, especially the sliding crude oil prices, is responsible for the decision.
Finance, Budget and National Planning Minister Zainab Ahmed dropped the hint at the State House in Abuja after an emergency meeting with President Muhammadu Buhari.
At the meeting were: Minister of State for Finance Clement Agba; Minister of State for Petroleum Resources Timipre Sylva; Central Bank of Nigeria (CBN) Governor Godwin Emefiele and Nigerian National Petroleum Corporation (NNPC) Group Managing Director Mele Kyari.
They deliberated on the consequences of the COVID-19 outbreak on the economy.
Briefing reporters on the issues discussed with the President, Mrs. Ahmed, who is the chairman of the Committee, said the group has a mandate to do a quick assessment of the impact of the outbreak of COVID-19 on the nation’s economy, especially as it affects crude oil benchmark price.
According to her, the committee would today submit its findings to the President, adding that the quantum of the cut on the budget would depend on what the assessment reveals.
She said: “We just met with the President to discuss the matter of the impact of the Coronavirus on our economy and Mr. President has formed us into a committee, with the Minister of State, Petroleum Resources, the Central Bank of Nigeria (CBN) Governor, the GMD NNPC and myself as members.
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”Our mandate is to make a quick assessment of the impact of this Coronavirus on the economy, especially as it affects the crude oil price. We will be writing a report and brief Mr. President tomorrow (today) or Wednesday (tomorrow) morning and after that we’ll also have more substantial information for the press.
“But it is very clear that we will have to revisit the crude oil benchmark price that we have at $57 per barrel, we have to revisit it and lower the price. Where it will be lowered to is the subject of the work of this Committee.
“What the impact will be on that is that there will be reduced revenue to the budget and it will mean cutting the size of the budget. The quantum of the cut is what we are supposed to assess as a committee.
“This is just an initial update to inform you on the directives that we have and subsequently we will be sending a report to the President, after which we will be briefing the press on the actions that government will be taking.”
Responding to a question bordering on the ongoing crude oil trade disagreement between Russia and Saudi Arabia, which had led to the recent slide in the oil prices to between $30 and $31 per barrel in the global oil market, the Minister of State for Petroleum Resources, Chief Sylva, said negotiations to regulate the prices is beyond Nigeria’s capacity.
Sylva explained that the conflict is not just between Saudi Arabia and Russia, but between two regulating authorities; Organisation of Petroleum Exporting Countries (OPEC) and OPEC+, respectively, adding that discussions would have to be at that level.
On the issue of engaging Russia, we as a member of OPEC are not in a position to take that engagement on our own unilaterally. There was a disagreement between OPEC and OPEC+, it’s not just Russia, but the biggest producers within OPEC and OPEC+ are Saudi Arabia and Russia.
“We believe that in the coming days when all of us would have begun to see effect of the reduction of prices, OPEC and OPEC+ might need to meet again and reconsider our positions.
“Meanwhile, we expect also that a lot of discussions are going on at the level of Saudi Arabia and Russia, but as Nigeria, we are not in a position to begin to engage members on this matter.”
