On Wednesday, the House of Representatives took action by asking its Finance and Petroleum Committees to look into some serious allegations regarding the Nigerian National Petroleum Company Limited (NNPCL), which was previously known as the Nigerian National Petroleum Corporation (NNPC). Reports from the Revenue Mobilisation Allocation and Fiscal Responsibility Commission suggested that the NNPCL might have held back a staggering amount of N8.48 trillion, which they claimed were subsidies for petrol.
Additionally, the House pointed out that the NNPCL allegedly failed to pay around $2 billion (equivalent to N3.6 trillion) in taxes to the Federal Government, as highlighted in a report by the Nigeria Extractive Industries Transparency Initiative (NEITI). The committees were tasked with finding out the total amount of revenue that the NNPCL did not report from petrol sales between 2020 and 2023, which is referred to as “under-recovery.”
In the same session, the House approved a plan called the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) for the years 2025 to 2027. This plan outlines how the government intends to manage its spending and financial policies over the next few years. It is an important step as it sets the stage for the upcoming budget presentation for 2025 by President Bola Tinubu.
The MTEF is essentially a roadmap for government spending, ensuring that financial targets are met throughout the budgeting process. The FSP is a document that details the government’s fiscal policies and macroeconomic framework for the medium term, playing a crucial role in the annual budget process.
Recently, President Tinubu submitted the MTEF and FSP to the National Assembly for review after receiving approval from the Federal Executive Council. For the year 2025, the government has set an oil price benchmark at $75 per barrel and expects to produce about 2.06 million barrels of oil daily. They also estimated an exchange rate of N1,400 to one dollar and projected a 6.4% annual growth rate for the country’s economy.
During the discussions in the House, Deputy Speaker Benjamin Kalu led the committee through the recommendations for the MTEF. However, the tone of the meeting shifted when Minority Leader Kingsley Chinda raised concerns about the proposed $75 oil price benchmark. He argued that since Nigeria exceeded this benchmark in the first quarter of 2024, it would be unwise to lower the benchmark for the upcoming year. He suggested that the House should consider keeping the benchmark at the higher rate of $77.96 that was set for 2024.
Chinda emphasized the importance of carefully reviewing the MTEF, as it is one of the most significant bills the parliament will pass. He pointed out that while the world is moving towards cleaner energy sources, the current reliance on oil should not lead to overly optimistic projections. In response, Abiodun Faleke, the Chairman of the House Finance Committee, defended the $75 benchmark, stating that it is reasonable given the unpredictability of global oil prices.
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The debate also touched on the target for domestic oil production, which is expected to rise from 1.78 million barrels per day in 2024 to 2.06 million barrels per day in 2025. Chinda questioned this ambitious target, noting that actual production figures were much lower, at around 1.05 million barrels per day. He urged the House to set more realistic production goals to avoid financial shortfalls.
Faleke countered that setting a higher target encourages oil producers to work harder and improve output. He mentioned that during previous administrations, Nigeria had successfully reached higher production levels.
The discussion also included concerns about the proposed exchange rate of N1,400 to the dollar, with some lawmakers expressing worries about the volatility of the naira and its implications for government borrowing. They highlighted the need for a more stable exchange rate to minimize financial risks.
In conclusion, the House adopted inflation rate projections for the next few years and agreed on a proposed federal budget for 2025, which amounts to N47.9 trillion, with significant portions allocated for capital expenditure and new borrowings.
