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2023: FG proposes N19.76trn budget of N12.41trn deficit

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…Projects N6.34trn revenue

…Targets N373.17bn  oil revenue, N5.97trn from non-oil sector

…treasury funded capital projects may suffer — Finance Minister

…As crude oil production challenges, PMS subsidy deductions threaten revenue growth targets

…Reps go tough on revenue generating Agencies

By Moses Adeniyi

Nigeria’s debt would further heap up as the Federal Government is working towards a proposed budget estimate of N19.76trillion with a deficit hovering between N11.30trn and N12.41trn – Nigerian NewsDirect has learnt.

The projected deficits between N11.30trn and N12.41trn in 2023, is up from N7.35trn in 2022. The figure represents 5.01 per cent of the estimated GDP (Gross Domestic Products), above the 3 per cent threshold stipulated in the Fiscal Responsibility Act, 2007.

Borrowings to fund budget deficits have been decried largely in view of rising debt profile and the burden of debt servicing recenfly.

Nigeria’s debt profile has been projected to hit N45trn by end of 2022, as Debt-to-GDP ratio stands at 23.27 per cent.

Although stakeholders have lamented that the larger chunk of revenue now goes for debt servicing, the Federal Government has held on the argument that the Country’s Debt to GDP ratio is still within sustainable limits.

This is just as stakeholders have observed a gloomy projection for budgetary performance in 2023 owing to crude oil production challenges, particularly with struggles to meet up with the 1.8million barrel per day oil output quota approved for the Country by the Organisation of Petroleum Exporting Countries and its allies (OPEC+).

Acts of pipeline vandalism and oil theft have posed strains to oil production as the Country struggles to maintain 1.4million barrel per day output, a development which stakeholders believe, alongside Premium Motor Spirit (PMS) subsidy (popularly called petrol subsidy)    deductions by the Nigerian National Petroleum Company Limited, threaten revenue growth targets and budgetary performance.

In a disclosure on Monday in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, who made the proposed 2023 budget estimate known, decried that the government might be unable to provide for treasury funded capital projects next year.

According to her, the inability to provide for treasury funded capital projects next year would largely be informed by dwindling revenue shortfalls and payment of subsidies on PMS.

The Minister in her presentation to the House of Representatives’ Committee on Finance at the hearing on the proposed 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper, pointed out that crude oil production challenges and PMS subsidy deductions by NNPC Limited constitute a major threat to the country’s revenue growth targets.

She stated that bold, decisive and urgent action must be taken to address revenue shortfall and expenditure efficiency at the national and sub-national levels.

“In this scenario, the budget deficit is projected to be N11.30tn in 2023, up from N7.35tn in 2022.  This represents 5.01 per cent of the estimated GDP (Gross Domestic Products), above the 3 per cent threshold stipulated in the Fiscal Responsibility Act, 2007,” she noted.

In her analysis of weighing the options of considerable scenarios, she said the government could opt for payment of petrol subsidy from January to December.

“Given the severely constrained fiscal space, budget deficit is projected to be N12.41tn in 2023, up from N7.35tn budgeted in 2022, representing 196 per cent of total FGN revenue or 5.50 per cent of the estimated GDP.

“This is significantly above the 3 per cent threshold stipulated in the Fiscal Responsibility Act 2007 and there will be no provision for treasury funded MDA’s capital projects,” she said.

She stated further that under the first scenario, the government’s projected revenue for 2023 is N6.34tn, out of which only N373.17bn is expected from oil related revenue, while the balance of N5.97tn will come from non-oil sources.

In the second scenario, the Minister said, “In addition to subsidy reform, this scenario assumes an aggregate implementation of cost-to-income limit of Government Owned Companies.

“With these, the 2023 FGN revenue is projected at N8.46tn out of which N.99tn or 23 per cent is projected to come from oil revenue sources.”

She noted that the business-as-usual scenario assumes that subsidy on PMS, which is estimated to be N6.7tn for a full year, will remain in 2023 and be fully provided for, while another scenario is the reform scenario which assumes that petrol subsidy will remain up to mid 2023 based on the 18 month extension announced early 2021, in which case, only N3.6tn will be provided for.

On the key assumptions of the proposed 2023 budget, the Minister said oil benchmark is estimated at $70 per barrel, with an oil production benchmark of 1.69 million barrel per day and an exchange rate of N435.02 to a dollar.

According to the Minister, inflation is expected to grow at 17.16 per cent, while the GDP is expected to grow at 3.75 per cent.

She said an upward pressure on prices is expected to be driven by the current and lag effect of the global price surge due to the Russia-Ukraine war, domestic insecurity, rising costs of imports, exchange rate depreciation as well as other supply side constraints.

In response, the Chairman of the House Committee on Finance, James Faleke, pointed out that in the prevailing financial situation in the country, all revenue sources explored by the government were constrained.

Faleke who said it was clear fact that when there is no revenue, every aspect of the country suffers, tasked all agencies appearing before the committee to provide the committee with accurate position of their revenue state.

According to him, the Committee would give no room to any agency to play with the revenue of the Country at this critical time.

Accroding to the Debt Management Office (DMO) Nigeria’s total public debt stock increased to N41.60trn in the first quarter of 2022.

“The total public debt stock as at March 31, 2022, was N41.60tn or $100.07bn, according to the Debt Management Office.

“The amount represents the domestic and external debt stocks of the Federal Government of Nigeria, the thirty-six state governments and the Federal Capital Territory. The comparative figures for December 31, 2021, were N39.56tn or $95.78bn,” the DMO had stated its report.

According to the DMO, the total public debt stock includes new domestic borrowing by the FGN to partly finance the deficit in the 2022 Appropriation Act, the $1.25bn Eurobond issued in March 2022 and disbursements by multilateral and bilateral lenders.

In March 2022, a DMO document signed by the Director-General, DMO, Patience Oniha, mentioned that Nigeria’s total debt stock is likely to reach N45trn as the DMO plans to borrow an additional N6.39tn to finance the 2022 budget deficit.

In the document, the Director-General, DMO, Patience Oniha, explained that the overall deficit in the 2022 budget was N6.30tn, representing 3.46 per cent of the country’s GDP.

Oniha had said that the budget deficit was to be financed mainly by borrowings from both domestic and foreign sources, as well as privatisation proceeds.

The Lagos Chamber of Commerce and Industry (LCCI) had lamenting the situation of debt profile and servicing burden, said Nigeria is struggling to service these debts due to revenue mobilisation challenges and an increased fuel subsidy burden.

The trend, according to the LCCI, was disturbing, given that debt servicing alone was higher than actual retained revenue in the first four months of 2022.

“There are already concerns that most, if not all, of the assumptions in the Medium-Term Expenditure Framework (MTEF) 2023-2025 will be missed as we continue to experience unprecedented levels of disruptions to supply chains and agricultural production.

“The 2022 budget assumptions have already fallen short in terms of inflation, exchange rate, and GDP growth rate and all of these assumptions have become inadequate.

“Nigeria’s Debt-to-GDP ratio now stands at 23.27 per cent, as against 22.43 per cent on Dec. 31, 2021.

“On the path of caution, we urge the Federal Government to discontinue this unsustainable pattern,” the President, LCCI, Michael Olawale-Cole, had said.

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Court adjourns suits seeking to stop Secondus, Omehia from PDP NEC, BoT meetings

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A Federal High Court, Abuja, on Friday, fixed April 16 for hearing of a suit seeking to stop former Chairman, Peoples Democratic Party (PDP), Uche Secondus, from participating in the party’s meetings.

Justice Inyang Ekwo, in a short ruling, also fixed the date in a separate suit filed to bar sacked Rivers Governor, Celestine Omehia, from attending the PDP’s National Executive Committee (NEC) meeting pending the hearing and determination of the matter.

Titus Jones, a member of the PDP at Ward 5, Ikuru Town, Andoni Local Government Area (LGA) of the state, had filed a suit marked marked: FHC/ABJ/CS/440/2024.

In the suit, Secondus; PDP; acting PDP Chairman, Umar Damagun; PDP Secretary, Samuel Anyanwu; PDP NEC; PDP National Working Committee (NWC); PDP Board of Trustees (BoT) and Independent National Electoral Commission (INEC) are 1st to 8th defendants respectively.

Jones, through his counsel, Joshua Musa, SAN, had sought an order restraining the NEC, NWC, party’s chairman, secretary, and BoT from allowing Secondus to attend any of the meetings pending the hearing and determination of the motion on notice, having been suspended from the party.

Also in another suit filed by Precious Wobisike, a member of PDP at Ubima Ward 8, Ikwerre LGA, Omehia, PDP, Damagun, Anyanwu, NEC and INEC as 1st to 6th defendants respectively.

In the originating summons marked: FHC/ABJ/CS/436/24, Wobisike, also through Musa, sought an order of Injunction restraining Omehia from demanding from Anyanwu, the party’s secretary, any notice of meetings of the NEC.

He also sought an order of injunction restraining Omehia from attending any NEC meeting of the party or participating in the proceedings/deliberations of such meetings in any manner howsoever.

Besides, Wobisike sought an order of injunction restraining Anyanwu from giving notice of meetings of the NEC to Omehia, “not being a former Governor of Rivers State as to be a member of the National Executive Committee.”

He equally sought an order restraining INEC from according recognition to the reports, proceedings, conclusions or resolutions reached at any NEC meeting attended by Omehia.

This, he said, is in violation of the judgment of the Supreme Court in the case of AMAECHI v. INEC (2008) 5 NWLR (Pt. 1080) p. 227, the judgment of the High Court of Rivers in the case of Sir Celestine Omehia v. The Governor of Rivers  & 2 Ors – Suit No: PHC/3317/CS/2022 and Article 31(1)(w) of the Constitution of PDP (2017 as amended).”

NAN observes that Justice Ekwo had, on April 5, granted the motions ex-parte moved by Musa on behalf of Jones and Wobisike restraining Secondus and Omehia from participating in the party’s meetings pending the hearing and determination of the substantive matters.

The judge, who ordered that the processes be served on the respondents within five days, fixed the matter for today for motion on notice.

When the first matter was called, Musa, who appeared for Wobisike, told the court that the ex-parte order had been served on the defendants.

He said the matter was fixed for hearing of the motion on notice.

However, Ibrahim Mark, who represented Omehia, told the court that they were served on Monday and due to the public holiday, they were yet to regularise their processes.

He sought an adjournment to enable them regularise their court documents.

M. S. Atolagbe, who appeared for 2nd to 5th defendants, aligned with Mark’s submission, and Musa did not oppose the application for adjournment.

Justice Ekwo consequently adjourned the matter until April 16 for hearing.

The judge equally fixed the sister case against Secondus to April 16 for hearing.

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Price crash: Dangote Refinery diesel will reduce Nigeria’s inflation — Aliko Dangote

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President of Dangote Group, Alhaji Aliko Dangote has revealed how diesel obtained from the Dangote Refinery can reduce Nigeria’s inflation rate.

Nigeria’s inflation rate reached 31.70 percent in February 2024, according to the National Bureau of Statistics (NBS), with food inflation at 37.92 percent – a 27yr high. The country’s inflation rate has been on the rise since January 2023.

Similarly, the fluctuating exchange rate of the dollar to naira has been pushing the prices of commodities and services. However, with the gradual gains recorded by the Naira over the past weeks, economic experts predict a gradual fall in the price of goods and prices with some manufacturers like Dufil Prima (makers of Indomie), airlines already crashing their prices.

The price of Diesel had also been affected in recent times by the exchange with the cost per litre rising to over N1,700.

Responding to this hike, Africa’s richest man Aliko Dangote has urged Nigerians to expect a drop in inflation given the reduction of diesel pump prices.

Speaking on Wednesday during a chat with journalists after he paid Eid-el-Fitr homage to President Bola Tinubu at his Lagos residence.

“I believe that we are on the right track. I believe Nigerians have been patient and I also believe that a lot of goodies will now come through. There’s quite a lot of improvement because if you look at it, one of the major issues that we’ve had was the naira devaluation that has gone very aggressively up to about N1,900.

“But right now, we’re back to almost N1,250, N1,300, which is a good reprieve. Quite a lot of commodities went up. When you go to the market, for example, something that we produce locally like flour, people will charge you more. Why? Because they’re paying very high diesel prices.

“Now, in our refinery, we started selling diesel at about N1,200 instead of N1,650 and I’m sure as we go along, things will continue to improve quite a lot,” Dangote said.

Speaking further, he said, “If you look at it now, when you are buying N1,650 or N1,700 for a litre of diesel, and that one has been cut off by almost two-thirds, you are now paying N1,200 for diesel.

“Maybe, going forward, even though the crude prices are going up, I believe people will not get it much higher than what it is today, N1,200. It might be even a little bit lower, but that can help quite a lot because if you are transporting locally-produced goods and you were paying N1,650, now you are paying two-thirds of that amount, N1,200. It’s a lot of difference. People don’t know.

“This can help to bring inflation down immediately. And I’m sure when the inflation figures are out for the next month, you’ll see that there’s quite a lot of improvement in the inflation rate. So a step at a time. And I’m sure the government is working around the clock to make sure that things get much better because it is in the interest of everybody that things get better.

Recall that marketers had earlier confirmed that the Dangote Refinery had commenced the sale of Diesel and that the product was dispensed to marketers at between N1,225/litre and N1,300/litre depending on the volume of purchase.

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Lagos-Calabar Coastal road to be completed in Tinubu’s tenure — Works Minister

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The Minister of Works, Dave Umahi has noted that the Lagos-Calabar Coastal road will be completed in President Tinubu’s tenure.

While fielding questions about the project on Channels Television’s The Morning Brief, Umahi said, “We are looking at eight years in the life tenure of Mr President [Bola Tinubu].”

The Minister said each kilometre of the coastal road would cost N4 billion but said the government’s prudence made that possible.

“You know, there are other projects not awarded by me that are also going for about N4 billion per kilometre,” the former lawmaker explained.

“So, I will pride myself, to the glory of God, that this project is the most prudent project that I’m starting. Other projects I made, we are reviewing, we are fighting, and we’re trying to review, the cost,” he said.

Umahi, however, said the cost is a tentative one.

“Well, I cannot sign my signature on that because it can come down, it can go up,” the minister said.

But there are plans to recoup the money via tolling, according to the minister.

“Let me leave out the infrastructure along the corridor. Let me just concentrate on the tolls and I put 50,000 vehicles as an average passage on these toll points per day,” Umahi said on the breakfast show.

“I put N3,000 as an average cost. N3,000 because the cars could be like N1,500, and the big trucks could be like N5,000,” he said. “So, we put an average.”

“In 15 years, you make back the money,” he said, dismissing calls that the cost budgeted for the road was high.

He explained further that there will be security at the toll gates and also some facilities like filling stations.

“At every point of tolling, we also have toll station where we have a kind of relief activities: the restaurants, filling stations, parking lots, and so on and so forth,” Umahi said.

“So, people will now have confidence. In these sections, we intend to put CCTV all through.”

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