COVID-19: FG Revises 2020 Oil Price Benchmark To $30

Federal Government on Monday revised the oil price for 2020 benchmark to US$30 per barrel and oil production to 1.7mbpd as a response to the ravaging effects of Coronavirus pandemic or COVID-19.

The government also said that all is set to finance the creation of a Special Public Works Programme that will result in the employment of about 1,000 people per each Local Government amounting to 774,000 Nigerians across the federation, and has provided N102.5 billion in resources to be available for direct interventions in the healthcare sector.

It is recalled that the 2020 budget, passed in December, was calculated assuming crude production of 2.18 million barrels a day at a price of $57 per barrel.

But, in her Ministerial Press Statement on Fiscal Stimulus Measures in response to the COVID-19 Pandemic & Oil Price Fiscal Shock, Zainab Shamsuna Ahmed,
Minister of Finance, Budget & National Planning, said the adjustments was part of recommendations of a Committee set up by President Muhammadu Buhari, on the 9th March 2020, to recommend fiscal measures to mitigate the significant fiscal risks currently faced by Nigeria due to the current global economic disruption caused by the COVID-19 crisis.

Mrs. Ahmed also disclosed that federal government had similarly had to adjust downwards our Non-Oil Revenue projections including various tax and customs receipts, as well as proceeds of privatisation exercises, stressing that the Budget Office is currently working on a revised 2020 – 2022 Medium-Term Expenditure Framework / Fiscal Strategy Paper (‘MTEF/FSP’) as well as an Amendment to the 2020 Appropriation Act.

“With regards to the Special Public Works Program, Mr. President had previously approved a Pilot Special Public Works Programme in eight States to be implemented by the National Directorate of Employment (‘NDE’) from February 2020 to April 2020. Mr. President has now approved that this Programme be extended to all 36 States and the FCT from October 2020 to December 2020.
“The selected timeframe is to ensure that the Programme is implemented after the planting season is over, and it will result in the employment of about 774,000 Nigerians (that is, 1,000 people per each Local Government). N60 billion in allowances and operational costs has been earmarked from the COVID-19 Crisis Intervention Fund for this initiative.

“The 2020 Appropriation Act was based on certain fiscal assumptions, which we have been compelled to revisit given the emerging economic realities. Specifically, projected Oil Revenues have been significantly affected in that:

a. Dated Brent Oil Prices fell to as low as US$19.125/barrel (as at Friday 3rd April 2020) as compared with the 2020 Budget Benchmark of US$57/barrel; and
b. Oil production in 2020 year-to-date is 2.0mbpd as compared with the 2020 Budget’s projection of 2.18mbpd.

“We are therefore revising the benchmark oil price for 2020 to US$30/barrel and oil production to 1.7mbpd. We have similarly had to adjust downwards our Non-Oil Revenue projections including various tax and customs receipts, as well as proceeds of privatisation exercises. In this regard, the Budget Office is currently working on a revised 2020 – 2022 Medium-Term Expenditure Framework / Fiscal Strategy Paper (‘MTEF/FSP’) as well as an Amendment to the 2020 Appropriation Act” she said.

The Minister said the proposed Amended Budget will provide for the COVID-19 Crisis Intervention Fund and other adjustments required due to the decline in international oil prices.
“We have also commenced engagements with the Leadership and key Committees of the National Assembly to discuss our plans, such that once the Executive’s 2020 Amendment Budget is completed, we shall expeditiously seek the requisite Presidential and Legislative approvals” she added.

On the N102.5 billion intervention fund for the health sector, the minister said the sum, N6.5 billion has already been made available to the NCDC for critical expenditure.

She reiterated the Federal Government’ commitment to supporting the States in these difficult times, particularly those States that are currently battling with the COVID-19 Pandemic, stressing that Lagos State has already been provided with N10 billion in emergency funding.

” As the situation in the FCT and other States at the forefront of our efforts unfolds, explicit criteria are to be agreed with the Federal Ministry of Health and the NCDC to determine when funds would be released to the affected States and the FCT. More funds are to be provided from the proposed COVID-19 Crisis Intervention Fund to address emerging and priority funding needs as these arise” she added.