FG, national assembly may clash over 2014 oil price benchmark

As Nigerians await the formal presentation of the 2014 budget proposals to the National Assembly by President Goodluck Jonathan, the Federal Government and the National Assembly may clash over what the appropriate oil price benchmark should be in the 2014 budget.

This is not the first time that argument will ensue between the two bodies on the oil price benchmark. The same issue occurred during the preparation of  the 2013 budget, a situation that led to delay in the signing of the budget into law.

In the  Medium Term Economic Framework and Fiscal Strategy Paper (MTEF and FSP) 2014-2016 presented to the lawmakers by the Federal Government the 2014, oil price benchmark was fixed at  $74 per barrel while the National Assembly has proposed  $76.5 per barrel in the  budget.

The Nigerian Tribune learnt that a report by the Joint Committees of the National Assembly on Finance and Appropriation had recommended an upward review of the oil benchmark price from $74 per barrel to $76.5 per barrel in the 2014 budget as contained in the Medium Term Economic Framework and Fiscal Strategy Paper (MTEF and FSP) 2014-2016.

The Nigerian Tribune gathered that the Federal Government may this time around stick to the $74 per barrel oil price benchmark as against the lawmakers' proposal based on the problems it encountered in the 2013 budget when the oil price benchmark was adjusted slightly upward to satisfy the yearning of the National Assembly.

According to investigation, the lawmakers are insisting on higher oil price benchmark to discourage the  continuous build up of the nation's foreign reserves above the internationally recognised standard of three months and free resources for the  provision of critical infrastructure whose multiplier effect on GDP would boost national development.

It will be recalled that after the Federation Accounts Allocation Committee (FAAC) meeting was stalemated for about three times within four months this year, the Minister of State for Finance, Dr Yerima Lawan Ngama, attributed the problem to the unrealistic oil price benchmark in the  2013 budget foisted on the economy by the National Assembly.

According to him, each time the world oil price fell below the budgeted price, the Federal Government would have to augment the balance from the excess crude account to pay statutory allocation to states and local government councils.

However, he said when the Federal Government was cash strapped and could not honour the augmentation, the states and local government councils resorted to boycott of FAAC meetings and blackmail.

Though the three tiers of government had agreed to be sharing the actual, the minister said the permanent solution is to have a realistic oil price benchmark for the 2014 budget, stressing that government will do everything possible to ensure this is reflected in the 2014 budget.

This is setting the pace for a showdown with the National Assembly.