Zainab Ahmed, Minister of Finance, said on Thursday that the Federal Government will be releasing new revenue initiatives which will include a new set of taxes and excise duties.
She also said the government is working towards ensuring it pushes its releases for capital projects from the 2018 budget to N1.1 trillion by the end of December.
The minister said this while answering questions at the public presentation of the 2019 budget highlights on Thursday in Abuja.
President Muhammadu Buhari, while presenting the 2019 budget estimates to a joint session of the National Assembly on Wednesday, said that in spite of the delay in the passage of the 2018 budget, N820.57 billion had been released for capital projects as at December 14.
He unveiled a federal budget of N8.83 trillion for the 2019 fiscal year, N300 billion lower than the N9.1 billion being implemented for the current fiscal year.
According to Buhari, N4.04 trillion or 50.31 percent is earmarked for recurrent expenditure and N2.03 trillion representing 22.98 percent earmarked for capital projects.
Other estimates are N492.36 billion for statutory transfers, N2.14 trillion for debt servicing and provision of N120 billion as sinking fund.
Ahmed said that the N820 billion that was released was for ministries, departments and agencies (MDAs) capital.
She added that there are also releases that go to the statutory transfer agencies released to them in bloc which include personnel, recurrent and capital.
“There are also capital releases that are done as part of the capital supplementation and that is not part of the N820 billion.
“The N820 billion is 43 percent of MDAs capital, we are working to push these releases to N1.1 trillion by the end of December and that will include the statutory transfers service and the rest of the MDAs whose capital we are currently processing.”
On the issue of fuel subsidies, she said that the National Assembly did not announce fuel subsidies of N800 billion for the fuel marketers, rather, it was the fuel marketers that were demanding or asking that the Federal Government should be paying them that.
“The NASS approved N326 billion and that approval has been conveyed to us and we are currently in the process of issuing promissory notes to these fuel marketers.
“Last week, we released the first batch of N177 billion to the fuel marketers and we are doing some reconciliation processes to release the second batch to them perhaps before the year closes out or in any case as early as possible in the new year.”
Ahmed said that the Ministry of Finance was focused on revenue generation to be able to mobilise more domestic revenue so that it could better fund the nation’s budget which clearly had a deficit.
“You can see from the performance that there is a gap between what is planned for in the budget and what is actually generated.
“We are doing all we can and very soon we will be releasing new revenue initiatives which will include a new set of taxes and excise duties.
“We will also be working with the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) on new and enhanced measures for enforcement and compliance.”
She added that the new measures may involve going to the NASS to amend some laws that have been identified to have some gaps and loopholes.
Udoma Udo Udoma, Minister for Budget and National Planning, said that of the total appropriation of N9.12 trillion, N4.59 trillion had been spent by September 30, against the expenditure target of N6.84 trillion.
This, he said, represents 67 percent performance, adding that spending on capital was prioritised in favour of critical ongoing infrastructure projects in the power, road, rail and agriculture sectors.
He added that implementation of the 2018 capital budget would continue into 2019 until the 2019 budget is passed into law.
Ita Enang, Senior Special Assistant (SSA) to the President on National Assembly Matters (Senate), clarified the issue of constituency projects allocation and funds.
He said that the money for constituency projects and the zonal intervention does not go to the individual lawmakers but to the different ministries.
“A lot of people still think that the money for constituency projects is given to the lawmakers but it is not given to them, it is just allocation and it is not cash.
“The executive arm of government does not allocate the constituency project funds to the sectors, rather it makes a bullet allocation to the National Assembly.
“It is for the National Assembly members individually and severally to choose and decide what is priority in their own area,” he said.
Meanwhile, to end its perennial default in meeting its Joint Venture (JV) obligations with international oil companies (IOC), beginning from fiscal 2019, the Federal Government will cut its holding to 40 percent, down from the prevailing 60 percent.
This is one of the strategies by the Federal Government to boost revenue and reduce its risk as revealed in the 2019 budget presented by President Muhammadu Buhari.
The new plan is expected to reduce government’s exposure emanating from the oil fields owned jointly by the oil majors and government through the Nigerian National Petroleum Corporation (NNPC).
It would be recalled that the Federal Government was given a discount of $1.7 billion from $6.8 billion cash call debt to its JV partners in December 2016. Under that ‘debt forgives’ arrangement, the Federal Government paid $5.1 billion instead. The partners included Mobil Producing Nigeria Unlimited (MPN); Shell Petroleum Development Company (SPDC); Total Upstream Companies in Nigeria (TEPN); and Chevron Nigeria Limited (CNL), among others.
“A JV exists where two or more parties combine together to execute an oil and gas transaction and mitigate risk associated with the business. It involves an equity arrangement between two or more independent enterprises, which result in the creation of a new organisational entity”, according to www.resolutionlaw.ng. In the Nigerian oil industry, virtually all the exploration and production in the oil & gas undertakings are based on joint ventures.
“Participant companies to a joint venture agreement relationship contribute assets, capital, unique enterprise, labour, risk sharing, market entry, tax benefits and so many others while it provides a benefit of maintaining the corporate independence of the participants and avoiding the economic and political risk associated with the merger or joint venture agreement”.
Apart from reducing its JV holdings, government is putting in place structures to help boost revenue in the coming year that is expected to wring more from oil resources, liquidate recovered assets and optimise operations of the Nigeria Customs, among others.
In addition, the Department of Petroleum Resources (DPR) is directed to complete the collection of past-due oil licence and royalty charges within three months.
Given the improved oil prices and production levels, NNPC is to immediately commence the recovery of all outstanding obligations, including those due from Nigerian Petroleum Development Company (NPDC) (a subsidiary of NNPC), which it had agreed to pay since 2017.
Another fall-out of the new initiative is that the Ministry of Finance, working with all the relevant authorities, has been authorised to take action to liquidate all recovered, unencumbered assets within six months.
In the meantime, the president has directed that work should be immediately concluded on the deployment of the National Trade Window and other technologies to enhance Customs collections efficiency from the current 64 percent to up to 90 percent over the next few years.
Less than 48 hours President Muhammadu Buhari submitted the 2019 budget before the joint sessions of the National Assembly, the President of the Senate, Bukola Saraki, on Thursday, gave a damning verdict that the budget has no hope for anybody.
Saraki, who stated this at an interactive session between the PDP presidential candidate, Atiku Abubakar, and civil society organisations (CSOs), in Abuja, added that statistics available do not indicate how the budget will be funded.
Speaking in his capacity as the Director General of the Peoples Democratic Party’s (PDP) Presidential Campaign Council (PPCCO), Saraki also declared that Nigerians were safe in 2015 than they are today.
Saraki in his opening remark, said, “Yesterday, we all heard the 2019 budget, that is a budget that has no hope for anybody because if you look at the statistics and the figures there’s poverty, if you look at the figures based on revenues that are coming in… there’s nothing left so where’s the future.
“There must be an alternative and that is what we hope that by this evening speaking to our candidate and vice presidential candidate, not based on sentiments, we are not voting on sentiments we are voting on what is the need for you.
“How is your life going to be better? Which party offers you a better future? Because we see you as those who are patriotic and committed. It’s not about what you’ll get today. It’s about the great country a lot of you have been passing that sacrifice over the years.”
The Senate president who noted that the president would not attend the January 19, 2019 presidential debate stressed that any president that wants to lead the country and by extension Africa should be able to tell the people what he wants to do.
He said, “This is an interactive session, I’m not sure whether the other political parties will give you an opportunity like this to ask them any question. I’m told that one has debated and you already know the answer to that debate. On the second one, I’m very sure he’s not going to debate. So how do you assess somebody who is not ready to tell you what he’s going to do?
“Those days are gone, my good people, the future of this country, a country that leads the continent that is not the example we want to set for this continent. The whole world is going in a direction, if you’re seeking a position, you must come and tell people what you want to do, you must sit down and they’ll ask you questions and that is why we’re here.
“Today is your day, we will sit down and take questions, I hope at the end of the exercise you will stand up and say yes this is the team that will secure Nigeria, this is the team that will unite Nigeria, this is the team that will fight the poverty in town and bring a bright future.”
Atiku’s running mate, Peter Obi, at the event lamented that 60 percent of the 2019 budget is dedicated to servicing debt of the APC government which has surpassed what was accrued in the 16 years of the PDP government.
Obi, who faulted the budget, said, “When you look at the revenue, we will spend 60 percent to service debt. So what is left? And they will borrow more.
“What they borrowed in 2016 and 2017 is the same PDP borrowed in 16 years. When you ask them they say they used it for capital project.”
Obi, who took the president to the cleaners over his statement that Nigerians should tighten their belts, decried the level of poverty in the country.
“Nigerian people have no belt again to tighten up. We now wake up every day with a sense of helplessness,” he said.
While he noted that APC administration didn’t heed warnings over the alarming rate of job losses and unemployment last year, the former Anambra State governor said the recent rise in the unemployment rate from 18.8 percent to 23 percent is only going to get worse because “nobody is doing anything.”
Atiku, who had a flight delay, was expected to attend the event as at the time of filling this report.
Similarly, some financial experts on Thursday said the proposed 2019 budget was unrealistic due to its questionable assumptions in view of the current economic realities in the country.
The experts disclosed this in separate interviews in Lagos, while reacting to the N8.83 trillion budget for 2019 presented by President Muhammadu Buhari to the National Assembly.
Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said the assumption of crude oil production of 2.3mbpd against the current production of 1.8 million barrels per day was on the high side.
Kurfi said the decision of OPEC to cut oil production by 1.2 million barrels per day from January 2019 for an initial period of six months should be a source of concern to Nigeria.
According to him, the price of crude oil at $60 per barrel is also on the high side in view of the current oil price at the global market.
“The capital expenditure, reduced from 30 percent to less than 25 percent, is not good enough when compared with infrastructural deficit of the country,” he said.
Kurfi said allocating about 25 percent or N2.14 trillion for debt servicing was taking the country to the old days before the country’s debts were cleared.
Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said the timing of the budget was very late considering what budget delay and passage had done to the economy.
Omordion also said the size of the budget, which reflected the expected low income from the major source of revenue of the government, oil, would increase unemployment and poverty in 2019.
He also said the oil price benchmark of $60 per barrel was very high due to expected supply cut from January by OPEC.
According to Omordion, pegging inflation figure at 9.9 percent is unrealistic, noting that the possibility of single digit is high considering the expected implementation of new minimum wage.