Senate Vires N180bn, Adds N33bn To 2016 Budget
The Senate yesterday approved the sum of N213 billion as virement to address shortfalls in the 2016 budget in order to fund critical recurrent and capital items.
This is an increase of N33 billion from the virement of N180 billion initially requested by President Muhammadu Buhari.
LEADERSHIP reports that the House of Representatives had on Tuesday, last week, approved the president’s request by increasing the amount requested to N208 billion after adopting a report of its committee on appropriation.
But the Senate committee on supply considered the recommendations of the Senate committee on appropriation which is slightly different from the resolution of the Lower House.
President Buhari had, in a letter dated Monday, October 24, 2016, addressed to both Senate President Bukola Saraki and Speaker Yakubu Dogara, said the request had arisen due to a number of reasons, which include shortfalls in provisions for personnel costs; inadequate provision ab initio for some items like the amnesty programme; continuing requirements to sustain the war against insurgency, and the depreciation of the Naira.
Meanwhile, before the approval of the virement request in the Senate, an argument ensued over the constitutionality of the presidential request or otherwise.
Deputy Senate president, Ike Ekweremadu, in his contribution to the debate, said virement was a military terminology and unknown to the 1999 Constitution, citing Section 81 sub-section 4 of the constitution to buttress his argument.
He argued that virement was unconstitutional as only Supplementary Appropriation is allowed by the Constitution in case of inadequate appropriation or non-appropriation.
But Senator Abdullahi Adamu (APC, Nasarawa) countered the argument, saying that Section 24 of the Fiscal Responsibility Act (FRA) provides for virement.
On his part, Senator Yahaya Abdullahi (APC, Kebbi) explained that Supplementary Budget is meant to address new issues in the existing Appropriation Act while virement is to address shortfalls in it.
There was a mild drama when Senate Leader Ali Ndume (APC, Borno) pointed out that Ekweremadu, who had made the observation, had been a deputy Senate president for over eight years during which virement requests were considered, and wondered why he was just now realising the unconstitutionality of the president’s request.
The Senate Committee on Appropriation, chaired by Senator Danjuma Goje (APC, Gombe), in its report, recommended the virement of N208,821,671,494 out of which the sum of N39,208,367,476 is from the capital component and the sum of N169,613,304,018 from the recurrent component of the Special Intervention Programme of the 2016 Budget.
The committee also recommended N5 billion for Sustainable Development Goals (SDGs) under the Ministry of Power, Works and Housing, and further recommended another N300 million virement from the 2016 Budget under the Transmission Company of Nigeria (TCN) for the construction of 132 KVA Substation at Gwaram, Jigawa State, to the Reconstruction of Fallen Towers and Replacement of Glass Insulators.
Speaking after the Senate’s resolution, Senate President Bukola Saraki, stated that the Upper Chamber believed that the Presidency would target the funding of local contractors as a way of pushing more resources to different areas of the country.
“As we work to release these special intervention funds for critical recurrent and capital items, it is important that these contractors have a track-record of efficient and quality work,” he said.
Saraki also stated that the Senate would utilise its oversight powers to ensure that the contracts follow a competitive bidding process, and that the projects themselves have a positive multiplier effect on the economy of local areas.
“Moving forward, as we round off the year,” he said, “the Senate and the Presidency will continue to work cooperatively to utilise the 2016 budget as a tool for economic growth and relief for local communities,” he added.
Also yesterday, the House of Representatives called on the Federal Ministry of Petroleum Resources and the Petroleum Products Prices Regulatory Agency (PPPRA) to review the current price template for PMS (petrol) with a view to bringing down the price of the product.
This was contained in a motion on the urgent need to ‘Review the Petroleum Price Template’ sponsored by Hon. Abubakar Fulata.
In his debate, Fulata noted the speculations of a possible hike in the price of PMS in the country and observed that the current template for the price of PMS could be reviewed downwards without it affecting the profit margin of marketers and transporters, saying that doing such will contribute to reducing the current inflationary trend in the economy.
The lawmaker disclosed that the current cost of freighting PMS stands at N109.1; lightering expenses, N4.56; NPA charges, N0.84; NIMASA charges, N0.22; financing, N2.51; jetty charges,N0.60; storage charges, N2.00; retailers’ margin, N6.00; transport allowance, N3.36; dealers’ margin, N2.36; bridging fund, N6.20, and marine transport average, N0.15 – bringing the total cost to N137.81.
He said: “The landing cost of PMS is N119.74, while the distribution cost and margins of marketers is N18.37, which totals N138.11, while marketers are allowed to sell the product within the range of N140-N145 per litre. Over 90 per cent of the current price of PMS in Nigeria is accounted for by transport-related charges, N124.34 out of N138.11, viz: lightering, N4.56; bridging fund, N6.20; marine transport, N0.15; transport allowance, N3.36; freight, N109.01; NIMASA charges, N0.22; NPA charges, N84.”
Fulata revealed that foreign vessels charge higher for lifting the PMS because Nigerian carriers, which were supposed to lift 50 per cent of the products, lack the capacity to do so.
He added that the provision of N4.56 in the price template for lightering services was unnecessary as, in line with international practice, all ships are supposed to dock at the harbour, unlike in Nigeria where the water in the harbours is shallow and, therefore, in dire need of dredging.
Fulata blamed the Nigeria Ports Authority (NPA) for refusing to carry out dredging despite collecting N0.84 for every litre of petrol, thereby costing Nigerian users N4.56 for every litre of petrol they buy.
He explained that bridging was supposed to be an annual event only when refineries are carrying out their turn around maintenance – which should not exceed three months, but he noted that the vandalisation of pipelines had made bridging a permanent feature in the price template.
The Adamawa lawmaker observed that the provision of N2.00 per litre in the template for the maintenance of storage facilities did not benefit government facilities located at over 21 fuel depots in the country; rather, “the fund goes to enrich an ever growing number of private depot owners whose facilities have now become the official storage facilities for government products while government facilities are allowed to decay.”
In his contribution, Hon. Dennis Agbo stated that the cost insurance and freight should be provided for, adding that studies had revealed that bridging cost can be reduced to as low as N2.00 or N4.00.
On his part, Hon. Egoh Oghene accused marketers of manipulating prices to feed their greed.
The House resolved to set up an ad hoc committee to interface with the Federal Ministry of Petroleum Resources on the review of the price of PMS and such related matters, and to report back to the House within eight weeks for further legislative action.
FG targets $2.5bn from gas
The minister of state for petroleum resources, Dr Ibe Kachikwu, has disclosed that the ministry is working hard to increase the number of Nigerian households using cooking gas to four million in the next two years, and will target 21 million households in the next five years.
In his keynote address at a stakeholders’ workshop organised by the vice president’s office in collaboration with Ministry of Petroleum Resources, with the theme, “Unlocking The Opportunities In The Domestic LPG Value Chain,” held at the PTDF Auditorium, Abuja, Kachikwu further disclosed that the ongoing reform in the oil and gas industry had the potential of creating $2.5 billion investment in the domestic gas subsector in the next 10 years.
The minister, who was represented by his senior adviser, Gbite Adeniji, promised that the government will do all it can to ensure the development of the domestic gas industry in order to facilitate employment opportunities, wealth creation, reduction of pressures on foreign exchange required for importation of gas, among others.
He, however, added that the prevention of untimely death is a priority, saying that “it is the responsibility of the government to ensure that Nigerians do not die using kerosene or firewood.”
The minister, therefore, called on the private sector to partner the government in its efforts toward unlocking the potentialities inherent in the sector.
Vice President Yemi Osinbajo in his address, revealed that Nigeria’s failure to tap the inherent potentialities available in liquefied petroleum gas (LPG) or cooking gas, resulted in the country subsidising the importation of kerosene with a total of $1 billion in 2015.
According to him, over 36 million Nigerian households depend on kerosene and firewood for cooking resulting in avoidable death in women and children in the country.
Prof Osinbajo further disclosed that as a result of unfavourable policies governing local participation in the industry, 40 per cent of the cooking gas used in the country during the period was imported due basically to the waiver given to importers of gas, while local producers paid value added tax (VAT) on the product.
The vice president stated that the workshop was designed to help the Committee on Gas Utilisation, set up by the federal government and chaired by himself, to come out with a policy that will lead to the harnessing of the potentialities of the industry to contribute positively to the economic development of the country.
Earlier, the managing director, Nigeria LNG Ltd, Tony Attah, in his welcome address, stated that although discussions about domestic LPG had been in the front burner in recent time, he believes that it is time to advance to feasible and practicable solutions to the challenges currently facing the industry.
According to him, government needs to intervene in the sector by removing fiscal and regulatory bottlenecks necessary for the creation of a conducive business environment for private sector investment in all segments of the value chain.
Speaking on practical steps the public and private sector should take to improve the sector, he said, “The removal of VAT on LPG as well as taxes and duties concession for LPG equipment and cylinders must be at the top of the priority list for the government
“On the other hand, the private sector must deepen the market to create efficiency and provide quality services at lower cost whilst ensuring that highest safety standards are adhered to across the entire value chain, especially in LPG plant operation, transportation and cylinder quality/recertification.”
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