Members of the Senate and the House of Representatives are in a quandary over the crude oil benchmark to recommend for the 2016 budget, The PUNCH learnt on Sunday.

The N6.07tn budget has had two days of debate on the general principles so far and will likely be referred to the committee stage on conclusion of the second reading this week.

Findings by The News reporter's  showed that while a majority of the lawmakers believed that the $38 per barrel proposed by President Muhammadu Buhari was no longer realistic in view of the dipping price of crude oil, they were also not sure of how much was realistic.


 
Investigations showed that even while debating the budget on the floor of the house,the lawmakers shied away from suggesting a figure they considered to be realistic, but they generally felt that $38 was not achievable.

“The reason is not far-fetched. The price of crude oil has been very unstable in the past weeks.

“As a matter of fact, let me say, every day, it falls. Members find it difficult to peg it at this or that price,” a committee chairman told The New reporters  in Abuja on Sunday.

It was gathered that members feared that oil price was already under $28, about $10 less than the budgeted figure, at a time the budget had yet to reach the committee stage.

“The volatility (of crude price) is worrisome. The budget will first go to the committee stage, where Ministries, Departments and Agencies will come to defend their proposals.

“That exercise may take the whole of February to be completed. It then means that nobody can guess what a realistic crude benchmark will be in the days ahead.

“There is confusion and we can’t really say anything (benchmark) that can stand the test of time for now,” another senior official told The News reporters.

The budget came with a N2.2tn deficit, including a domestic borrowing of N984bn and foreign borrowing of N900bn.

There were claims last week that the Federal Government might resort to borrowing above the budgeted borrowing plan to fund the budget.

When contacted, the Majority Leader, Mr. Femi Gbajabiamila, said the best solution was for the government to forget about relying on oil revenue to fund this year’s budget.

According to Gbajabiamila, the National Assembly can just retain the $38 (benchmark) the way the President brought it, but suggested that the government should ignore oil revenue this year.

He advised that attention should be shifted to non-oil revenue sources, including taxes, as the escape routes.

The Majority Leader said, “I have always said we should ignore the oil revenue for the purpose of the 2016 budget and pretend it does not exist and base the budget on other revenues, including maximised tax revenue.

“Any oil revenue should be treated as extra revenue or surplus in an amended or supplementary budget.

“As it is, the benchmark ($38) should remain as it is because we cannot keep going back and forth. What can be done is to bring any amendment (to the budget) at some point midway when there may be some stable and realistic price.

“Do not forget that the benchmark ($38) is premised on the Medium Term Expenditure Framework as passed by the House.”

Also, strong indications emerged on Sunday that the Senate had concluded plans to seek the opinion of both domestic and foreign-based economists and financial experts on the best approach to adopt in arriving at a realistic oil benchmark for the 2016 budget implementation.

A cross section of the senators who spoke with one of our correspondents on the issue were of the view that the $38 per barrel proposed by President Buhari, on December 22, 2015, was no longer feasible following the dwindling oil price in the global market.

However, while some suggested the downward review of the benchmark to as low as $27 per barrel, others argued that the Buhari’s proposal should be left unchanged in anticipation of the increment in oil prices in the first quarter of the year.

The Senate spokesperson, Senator Sabi Abdullahi, and the Chairman, Senate Committee on Finance, John Enoh, argued that the most realistic option at the moment was for the National Assembly to approve the downward review of the benchmark in conformity with current oil price.