Oil price crash: States insist on $65 budget benchmark
Despite the fall in the crude oil price and the diminishing Federal Allocation, state governments have insisted that they would not review the $65 per barrel benchmark in their budget proposals for 2015.
The global oil benchmark, Brent, against which Nigeria’s oil is priced, had tumbled below $58 per barrel, hitting its lowest levels since May 2009.
Oil prices have been in steep decline since June 2014 as a result of slow demand growth and the United States’ oil boom, which has increased supply.
SUNDAY PUNCH learnt that to sustain the benchmark, some of the states are also considering ways of boosting their Internally Generated Revenue.
The Abia State Government said it was not contemplating withdrawing the 2015 budget for any adjustment over the crashing oil price benchmark.
Abia has a budget of N102 billion for 2015.
The state Commissioner for Finance, Dr. Philip Ntoo, told one of our correspondents in Umuahia that the state considered the falling oil price in the preparation of the budget.
He said the Ministry of Finance had set up a committee to break down the budget and find out if there were areas that needed adjustment.
Ntoo also said his office was monitoring developments in the economy and would manage the situation.
Also, the Government of Plateau State said it would not withdraw the 2015 budget proposal, which was recently presented to the State House of Assembly.
Governor Jonah Jang of Plateau State had presented a budget outlay of N215, 465, 835, 418 to the state House of Assembly.
The budget is N10 billion less than the 2014 budget of N225, 058, 026, 306.
The state Commissioner for Finance, Mr. Davou Mang, said, “It will not be wise withdrawing the budget on impulse because if oil prices normalise, there may be the need to withdraw it again. Since budgets are only statements of intentions, what the government would do is to monitor the developments and make adjustments where necessary.”
“If you look at the budget, it is anchored on completion of ongoing projects. What government would do now is to look at those projects and prioritise them, and see the ones we can complete with the funds available.”
It was a similar case in Rivers State, where the government said it would continue to maintain its operating expenditure such as salaries, pension and other basics despite the crash in oil price.
The State Commissioner for Finance, Dr. Chamberlain Peterside, told SUNDAY PUNCH that though the budget proposal for 2015 was ready by December 2014, the necessary adjustments had been made in line with the economic realities.
Peterside said, “No section of the budget or any sector of the economy will suffer zero allocation.
“We believe that the roads that are ongoing have to get priority. There are several priority roads; I don’t have the list here, but the Ministry of Works has already earmarked funds for several priority roads. There is no attempt or effort to create or establish new projects.”
The Lagos State Government also said it was not worried about the crashing oil price.
The Lagos State Commissioner for Information and Strategy, Mr. Lateef Ibirogba, on Friday pointed out that although the state was also affected by the shortfall, it had a forecast for the crash of oil price while preparing the 2015 budget proposal.
He said, “Lagos does not use the Federal Government benchmark; we go far low. Also, the budget for 2015 is about the same as that of 2014. It is part of the government foresight for things like this and to allow the incoming government to make its contributions to the budget. So, there is no need to adjust or reorder the budget.”
The Kwara State Government said it was studying the falling oil price to know whether it would withdraw or review its 2015 budget proposal already before the state House of Assembly.
The Commissioner for Finance in Kwara State, Mr. Demola Banu, “The oil price is fluctuating; you cannot just by spot assessment withdraw or review the budget. We will keep studying the movement. If it becomes necessary, definitely, we would do the needful. But it is not as if you can change the budget because of short term fluctuation. You cannot plan a budget based on spot price of oil.
Similarly, the Ogun State Government said it would not tamper with its N210.354bn Appropriation Bill for 2015.
The state Commissioner for Finance, Mrs. Kemi Adeosun, said the government would implement the proposed N82.094bn budget in totality and would not adjust it in any form.
“We are not adjusting our budget at all, as we do not see a need to do so,” she said.
In Deta State, the government is waiting for the final oil price benchmark taken by the Federal Government before deciding to review its budget before the state’s legislature.
A close aide to Governor Emmanuel Uduaghan, who did not want his name in print because he was not authorised to speak on the matter, said the proposed budget before the state House of Assembly was calculated based on the oil price benchmark adopted by the Federal Government.
Similarly, the Oyo State Government said it would not cut down on the N141, 777, 770 budget proposal for the 2015 fiscal year, even if the present dwindling oil price continued.
The state Governor Abiola Ajimobi, who spoke through his Special Adviser on Media, Mr. Festus Adedayo, said despite the situation, the government would not introduce new tax to the people.
“We are not likely to adjust the budget but we may have to cut down heavily on government spending. We strive to ensure that no sector suffers neglect or zero allocation because this government believes that every sector is important.”
In the same vein, the Ekiti State Government stated that it had no plans to adjust the 2015 budget proposal in the face of dwindling oil benchmark and reduction in the Federal Allocation.
In a telephone interview with one of our correspondents on Friday, Governor Ayodele Fayose’s Special Assistant on Information, Mr. Lanre Ogunsuyi, said, “This is the time for all the states to look into other sectors apart from federal revenue so that we can turn the challenges into advantages,” he said.
The global oil benchmark, Brent, against which Nigeria’s oil is priced, had tumbled below $58 per barrel, hitting its lowest levels since May 2009.
Oil prices have been in steep decline since June 2014 as a result of slow demand growth and the United States’ oil boom, which has increased supply.
SUNDAY PUNCH learnt that to sustain the benchmark, some of the states are also considering ways of boosting their Internally Generated Revenue.
The Abia State Government said it was not contemplating withdrawing the 2015 budget for any adjustment over the crashing oil price benchmark.
Abia has a budget of N102 billion for 2015.
The state Commissioner for Finance, Dr. Philip Ntoo, told one of our correspondents in Umuahia that the state considered the falling oil price in the preparation of the budget.
He said the Ministry of Finance had set up a committee to break down the budget and find out if there were areas that needed adjustment.
Ntoo also said his office was monitoring developments in the economy and would manage the situation.
Also, the Government of Plateau State said it would not withdraw the 2015 budget proposal, which was recently presented to the State House of Assembly.
Governor Jonah Jang of Plateau State had presented a budget outlay of N215, 465, 835, 418 to the state House of Assembly.
The budget is N10 billion less than the 2014 budget of N225, 058, 026, 306.
The state Commissioner for Finance, Mr. Davou Mang, said, “It will not be wise withdrawing the budget on impulse because if oil prices normalise, there may be the need to withdraw it again. Since budgets are only statements of intentions, what the government would do is to monitor the developments and make adjustments where necessary.”
“If you look at the budget, it is anchored on completion of ongoing projects. What government would do now is to look at those projects and prioritise them, and see the ones we can complete with the funds available.”
It was a similar case in Rivers State, where the government said it would continue to maintain its operating expenditure such as salaries, pension and other basics despite the crash in oil price.
The State Commissioner for Finance, Dr. Chamberlain Peterside, told SUNDAY PUNCH that though the budget proposal for 2015 was ready by December 2014, the necessary adjustments had been made in line with the economic realities.
Peterside said, “No section of the budget or any sector of the economy will suffer zero allocation.
“We believe that the roads that are ongoing have to get priority. There are several priority roads; I don’t have the list here, but the Ministry of Works has already earmarked funds for several priority roads. There is no attempt or effort to create or establish new projects.”
The Lagos State Government also said it was not worried about the crashing oil price.
The Lagos State Commissioner for Information and Strategy, Mr. Lateef Ibirogba, on Friday pointed out that although the state was also affected by the shortfall, it had a forecast for the crash of oil price while preparing the 2015 budget proposal.
He said, “Lagos does not use the Federal Government benchmark; we go far low. Also, the budget for 2015 is about the same as that of 2014. It is part of the government foresight for things like this and to allow the incoming government to make its contributions to the budget. So, there is no need to adjust or reorder the budget.”
The Kwara State Government said it was studying the falling oil price to know whether it would withdraw or review its 2015 budget proposal already before the state House of Assembly.
The Commissioner for Finance in Kwara State, Mr. Demola Banu, “The oil price is fluctuating; you cannot just by spot assessment withdraw or review the budget. We will keep studying the movement. If it becomes necessary, definitely, we would do the needful. But it is not as if you can change the budget because of short term fluctuation. You cannot plan a budget based on spot price of oil.
Similarly, the Ogun State Government said it would not tamper with its N210.354bn Appropriation Bill for 2015.
The state Commissioner for Finance, Mrs. Kemi Adeosun, said the government would implement the proposed N82.094bn budget in totality and would not adjust it in any form.
“We are not adjusting our budget at all, as we do not see a need to do so,” she said.
In Deta State, the government is waiting for the final oil price benchmark taken by the Federal Government before deciding to review its budget before the state’s legislature.
A close aide to Governor Emmanuel Uduaghan, who did not want his name in print because he was not authorised to speak on the matter, said the proposed budget before the state House of Assembly was calculated based on the oil price benchmark adopted by the Federal Government.
Similarly, the Oyo State Government said it would not cut down on the N141, 777, 770 budget proposal for the 2015 fiscal year, even if the present dwindling oil price continued.
The state Governor Abiola Ajimobi, who spoke through his Special Adviser on Media, Mr. Festus Adedayo, said despite the situation, the government would not introduce new tax to the people.
“We are not likely to adjust the budget but we may have to cut down heavily on government spending. We strive to ensure that no sector suffers neglect or zero allocation because this government believes that every sector is important.”
In the same vein, the Ekiti State Government stated that it had no plans to adjust the 2015 budget proposal in the face of dwindling oil benchmark and reduction in the Federal Allocation.
In a telephone interview with one of our correspondents on Friday, Governor Ayodele Fayose’s Special Assistant on Information, Mr. Lanre Ogunsuyi, said, “This is the time for all the states to look into other sectors apart from federal revenue so that we can turn the challenges into advantages,” he said.
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