Updated: March 7, 2021
The Nigerian Senate on Tuesday said a cut to the N10.594 trillion budget for 2020 passed by the National Assembly on December 5, 2019, was “inevitable” following the crash in crude oil prices.
The resolution was reached sequel to the adoption of the recommendations of the report of the Joint Committee on Finance; Appropriations; National Planning and Economic Affairs; and Petroleum Resources (Upstream).
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Accordingly, the Upper chamber, while adopting the recommendations of the Joint Committee during plenary, resolved that the National Assembly, upon agreement with the Executive arm of Government, would review downward the Appropriation Act 2020.
The Senate, while urging Revenue generating agencies to live up to their responsibility in line with the Fiscal Responsibility Act passed by the National Assembly, said that both chambers will continue to engage the executive on a regular basis in line with their mandate.
Chairman of the Joint Committee, Senator Olamilekan Adeola (APC – Lagos West), while presenting the report, disclosed that the panel in reaching the proposed recommendations took into consideration the Cost of production of a barrel of crude oil compared with the other counterparts in the Petroleum Producing Countries; the need to prioritise both the Social and the Real Sector of the economy looking at their importance to the overall benefit of Nigeria; Loss of revenue as a result of Gas flaring which runs into several billions of dollars; Devaluation of Naira; and Removal of oil subsidy.
According to the lawmaker, “the short term solution is to address the sharp drop in the crude oil price which is creating difficulties in funding the 2020 Appropriation Act as passed by the National Assembly.
“The long term solution discussed is the need to consider and pass the Petroleum Industry Bill (PIB), which is yet to laid before the National Assembly.
“This will address the issue of cost of production and Gas flaring where the country’s resources is going down the drain and other issues that might affect the petroleum sector.”