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Senate passes 2022-2024 MTEF/FSP, okays N13.98trn budget projection for 2022

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Chamber Senate
Senate chamber
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*Approves USD$57 per barrel oil benchmark, N410/US$1 Exchange rate

The Senate has passed the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) ahead of the expected presentation of the 2022 Appropriations bill to the National Assembly by President Muhammadu Buhari.

The passage of the 2022-2024 Medium Term Expenditure Framework followed the consideration and exhaustive deliberation of a report by the Joint Committees on Finance; Local and Foreign Debts; Banking, Insurance and other Financial Institutions; Petroleum Resources (Upstream); Downstream Petroleum Sector and Gas.

The Joint Committee report was presented by Senator Solomon Olamilekan Adeola (APC, Lagos West), who chairs the Finance Committee.

The chamber during consideration of the report gave its nod to the Federal Government’s revenue projection of N8.36 trillion; and proposed expenditure of N13.98 trillion.

Accordingly, it also approved the daily crude oil production of 1.88mbpd, 2.23mbpd, and 2.22mbpd for 2022, 2023 and 2024, particularly “in view of average 1.93mbpd over the last 3 years and the fact that a very conservative oil output benchmark has been adopted for the medium term in order to ensure greater budget realism”.

The Senate in its recommendations approved the Benchmark oil price of USD$57 per barrel; adopted the Exchange Rate of N410.15/US$ by the Executive for 2022-2024; and gave its nod to the projected Gross Domestic Product (GDP) growth rate of 4.20%; as well as 13% inflation rate.

In addition, the chamber approved fiscal deficit of N5.62 trillion; new borrowings of N4.89 trillion – an amount which includes Foreign and Domestic borrowing – subject to the provision of details of the borrowing plan to the National Assembly.

The Senate also approved other parameters such as Statutory transfers totaling N613.4 billion; Debt Service estimate of N3.12 trillion; Sinking Fund to the tune of N292 billion; Pension, Gratuities and Retirees Benefits of N567 billion.

Out of the Aggregate Federal Government’s Expenditure of N13.98 trillion, the upper chamber approved the sum of N6.12 trillion for Total Recurrent (Non-debt); N3.47 trillion as Personnel Cost for Ministries, Departments and Agencies (MDAs); N3.26 trillion for Capital Expenditure (exclusive transfers); N350 billion Special Intervention (Recurrent); and N10 billion for Special Intervention (Capital).

The upper chamber in its report recommended that the Fiscal deficit estimate of N5.62 trillion also be sustained due to the Federal Government’s conservative approach to target setting and its determination to improve collection efficiency of major revenue generating agencies.

It further called on the Salaries and Wages Commission to review the salary structure of all Ministries, Departments and Agencies (MDAs), in other to come up with a new salary structure that will reflect the true financial position of the Agencies.

The chamber also demanded a continuous review of the Fiscal Responsibility Act to ensure that all revenues are remitted to the Consolidated Revenue Fund (CRF) as at when due, in order to curtail frivolous deductions and diversion of funds by the MDAs.

It further maintained that all laws relating to mining businesses be reviewed as a matter of urgency, to ensure upward review of rates applied to royalties, ground rent and licenses renewal of all mining companies operating in Nigeria to ensure transparency in the collection of revenue by relevant agencies, as well as recommend stringent sanctions in proposed new laws to address illegal mining.

The Senate amid its recommendations also called on the Nigeria Customs Service to accelerate the process of installing scanners at all ports across the country to curb the issues of smuggling and underpayment of custom duties on imported goods which has resulted in huge loss of revenue to the government.

It also charged the Federal Government to urgently implement the Petroleum Industry Act recently assented to by the President in order to curtail the problems of smuggling and round-tripping of petroleum products imported into the country.

In addition, the chamber recommended that the proposed budget of Government Owned Enterprises (GOEs) be reviewed upward to show the reflection of their capabilities to generate more revenue as a result of the findings of the Joint Committee.

Consequently, it further recommended that the offices of the Accountant General (AGF), Auditor General of the Federation (AuGF) and Fiscal Responsibility Commission be strengthened in the area of staffing and proper funding of its activities to ensure optimal performance of their duties in order to adequately monitor the remittances of all government revenue.

The chamber posited that the Act establishing some MDAs such as – Nigeria Investment Promotion Council (NIPC), National Lottery Trust Fund Act, Bank of Industry Act, Bank of Agriculture Act, Energy Commission Act and Nigeria Nuclear Regulatory Commission – if  reviewed and amended as a matter of urgency, would assist to generate more revenue to the coffers of government.

It also recommended that  the Federal Government budget be reviewed and purged of some agencies with demonstrated capacity to stand on their own without any recourse to Federal Government of Nigeria budget.

The chamber gave example of such agencies to include the National Agency for Food and Drug Administration and Control (NAFDAC) and Nigerian College of Aviation Technology, Zaria.

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Business & Economy

We Have No Magic Wand, Tackling Inflation Will Take Time — Cardoso

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Yemi Cardoso,CBN Governor
Yemi Cardoso,CBN Governor
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The Governor of Central Bank of Nigeria, Mr. Olayemi Cardoso has urged the citizens to be patient over the fight against current inflation and hike in food items in the country.

Cardoso disclosed this while briefing journalists at the end of the Monetary Policy Committee, MPC, meeting in Abuja.

The CBN governor mentioned that there was no magic needed to solve inflation in Nigeria but rather patience.

Also, Cardoso noted that despite pressure from food inflation, the general inflation rate was “moderating”, pointing out that “the tools the Central Bank is using are working”.

He stated, “I have several times and I will say again, there is no magic wand. These are things that need to take their time.

“I am pleased and confident that we are beginning to get some relief and in another couple of months we will see the more positive outcomes from the Central Bank have been doing.”

He added, “The committee thus reiterated several challenges confronting the effective moderation of food inflation to include rising costs of transportation of farm produce, infrastructure- related constraints along the line of distribution network, security challenges in some food producing areas, and exchange rate pass-through to domestic prices for imported food items.

“The MPC urged that more be done to address the security of farming communities to guarantee improved food production in these areas.

“Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system.”

The Central Bank of Nigeria has also blamed the recent volatility of the country’s foreign exchange market on seasonal demand for dollars.

“Members further observed the recent volatility in the foreign exchange market, attributing this to seasonal demand, a reflection of the interplay between demand and supply in a freely functioning market system,” a communique issued by the committee on Tuesday stated.

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Business & Economy

Port Harcourt Refinery Begins Full Operations Next Month

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Port Harcourt Refinery
Port Harcourt Refinery
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The 210,000-barrel-per-day Port Harcourt refinery is expected to commence operations by the end of July, following multiple delays.

National Public Relations Officer of the Independent Marketers Association of Nigeria, Chief Ukadike Chinedu, revealed this new timeline on Monday. He noted that the refinery’s operation would boost economic activities, reduce petroleum product prices, and ensure an adequate supply.

In December last year, Minister of State for Petroleum Resources, Heineken Lokpobiri, announced the mechanical completion and flare start-off of the Port Harcourt refinery, the largest in the region.

The refinery consists of two units: an older plant with a 60,000-barrel-per-day capacity and a newer plant with a 150,000-barrel-per-day capacity. The refinery was shut down in March 2019 for the first phase of repairs after the government enlisted Italy’s Maire Tecnimont as a technical adviser and appointed oil major Eni as a technical adviser.

On March 15, 2024, NNPC Limited’s Group Chief Executive Officer, Mele Kyari, announced that the Port Harcourt refinery would begin operations in about two weeks. He made this statement during a press briefing following his appearance before the Senate Ad hoc committee investigating the various turnaround maintenance projects of the country’s refineries.

“We achieved mechanical completion in December,” Kyari stated. “We now have crude oil stocked in the refinery and are conducting regulatory compliance tests. The Port Harcourt refinery will start within two weeks.”

However, two months later, the refinery had yet to commence operations.

In an interview, IPMAN’s Ukadike emphasized that the work done on the refinery represented a complete overhaul rather than mere rehabilitation. He assured that every effort was being made to meet the July deadline.

Ukadike said, “When we visited, the MD informed us that the refinery was nearly ready and would start production by the end of July. The overhaul is extensive, with all the armoured cables replaced and everything almost brand new. The maintenance turnaround is massive, with work being done day and night. All hands are on deck to meet the target. By the end of July, the refinery should be operational.”

When asked about the government’s previous unfulfilled promises to restart the refinery, Ukadike acknowledged the delays but noted that no reasons were given for missing the last deadline in April

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CBN Halts 0.5% Cybersecurity Levy

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CBN Headquarters Abuja
CBN Headquarters Abuja
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The Central Bank of Nigeria (CBN) has withdrawn the circular directing banks to implement a 0.5 per cent cybersecurity levy on electronic transactions in the country.

The CBN announced this in a revised circular dated May 17, 2024.

The circular was addressed to commercial banks, Payment Service Providers (PSPs), non-interest, and merchant banks, among others.

It was signed by the CBN Director of Payment Systems Management, Chibuzor Efobi, and the Director of Financial Policy and Regulation Department, Haruna Mustafa.

The circular read: “The Central Bank of Nigeria circular dated May 6, 2024 (Ref: PSMD/DIR/PUB/LAB/017/004) on the above subject refers.

“Further to this, please be advised that the above-referenced circular is hereby withdrawn.”The withdrawal of the circular on the cybersecurity levy followed its suspension by President Bola Tinubu.

it would be recalls that Tinubu suspended the controversial cybersecurity levy on electronic transfers on May 14.

Minister of Information and National Orientation Mohammed Idris, who made this known while speaking to journalists after the Federal Executive Council (FEC) meeting at the Presidential Villa in Abuja, disclosed that Tinubu directed the CBN to suspend the implementation and review the modalities for the implementation of the levy.

Idris added that the levy was thoroughly discussed at the FEC meeting, saying the president was not oblivious to the feelings of Nigerians.

It would be recalled that CBN, in a circular dated May 6, directed banks to start charging a 0.5 per cent cybersecurity levy on all electronic transfers.

The apex bank stated that the deduction and collection of the cybersecurity levy is a sequel to the enactment of the Cybercrime (prohibition, prevention etc) Amendment Act of 2024.

This was greeted with wide condemnations by Nigerians, with many groups and individuals calling for the immediate reversal of the levy.

The House of Representatives also asked the CBN to withdraw the directive.

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