Given the nation’s heavy dependence on oil revenue, and as part of the need “to hope for the best but prepare for the worst,” the Nigerian Senate, on Tuesday, constituted a joint panel to seek, ways of insulating the economy against the impact of the sudden crash of crude oil price globally.
This followed a point of order raised by the Senate Leader, Yahaya Abdullahi (APC – Kebbi North), during plenary over rising concerns on the spread of the dreaded Coronavirus (COVID – 19) disease which has led to the crash of several markets across the world.
President of the Senate, Ahmad Lawan, “we passed the Fiscal Strategy Paper and MTEF, and subsequently the budget, on the benchmark price of $57 per barrel. Today, that price has crashed to $31 USD there about, and we don’t know where this will stop.
“And of course, the economy of our country depends rightly on the export of crude.
“Now, this is a real situation that is starring us in the face. As a parliament, we need to be proactive and up-to-date with the situation, so that we are also able to take a decision when it matter for us to do so.”
“Therefore, I will suggest here, that in order for this Senate to be proactive and to protect whatever will be the situation for Nigeria to implement the budget in a way and manner that will positively affect the lives of our citizens, we form a joint committee.
“This Joint Committee will continue to engage with people in government, as well as people outside of government, so as to be abreast with all necessary information.
“The committee will engage with the Ministry of Finance and National Planning, and any other Ministries that you feel you need to have engagement with for you to have information,” Lawan added.
He said the Joint Committee is to engage the Executive arm of government on measures to steer the economy from the negative impact of the crash, which according to Reuters has seen oil-producing nations lose over $500m already.
Membership of the panel comprises the Senate Committees on Finance; National Planning; Appropriation, and Petroleum (Upstream).
“Our Committees should be prepared, so that whatever happens, we hope this crisis does not last for long, but if it does, we have to be prepared,” the lawmaker urged.
The joint committee is to fashion workable strategies that will be harmonized with those of the Executive arm of government so as to stem the impact of the oil price crash on the economy.
The move by the Senate is coming amidst plans by the Federal Government to scale down the nation’s N10.6tr 2020 budget because of the oil price drop, according to Mrs. Zainab Ahmed, the Finance Minister on Monday.
The downward revision came as oil prices dropped as much as a third after Saudi Arabia launched a bid for market share following the collapse of an output pact with Russia.
Crude oil sales make up around 90% of Nigeria’s foreign exchange earnings, even as the 2020 budget is based on an assumed crude production benchmark of 2.18m barrels per day. By Monday, Brent crude futures were down about 20% at slightly above $36 a barrel.
“There will be reduced revenue on the budget and it will mean cutting the size of the budget,” Mrs. Ahmed told reporters in Abuja, after a meeting with President Muhammadu Buhari.
She announced plans to be part of a committee, which also includes the Minister of State for Petroleum, Managing Director of state-oil company, the Nigerian National Petroleum Corporation (NNPC) and the Governor of the Central Bank of Nigeria (CBN), that would determine the size of the budget cut in the coming days.