Reactions have continued to trail the $7.3trn 2017 federal budget presented by President Muhammadu Buhari on Wednesday to a joint session of the National Assembly, which allocated the large chunk of N520 billion to the Ministry of Works, Power and Housing.
Reacting to the development, Head, Corporate Communications Department, Eko Electricity Distribution Company Plc, Godwin Idemudia, said the budget for the sector was a welcome development. According to him, it shows that the government is interested in infrastructure development of the country.
“It is a sign of better things to come. What this means is that there is hope for Nigeria. It shows clearly that the government is listening to the people. Infrastructure will now be in place. Kudos to the government” he said.
On the oil price benchmark of $42 per barrel which the budget was based, Managing Director cum CEO, Cowry Assets Management Limited, Johnson Chukwu, said the price looks achievable because oil now sells at $47 per barrel, and especially with the OPEC and non-OPEC cut deal.
“The price benchmark for the budget is achievable particularly because oil is now above $57 per barrel. Again, the newly agreed cut deal between OPEC and non-OPEC will also do the magic,” he said.
However, Chukwu disagreed with government’s projection of 2.2 million barrels a day for 2017. According to him, the figure is “too ambitious”.
“where the government will face a bit of challenge is with the 2.2 million barrels a day projection. The country has not been able to achieve 2.2m for the past one year. So, it may not be possible because of the violence ongoing in the Niger Delta,” he said.
He said the government must revise those they are negotiating with.
“The key thing is that the government has been engaging the wrong people which are the Niger Delta elders and politicians. The important people who will stop the violence are the militants. The government should identify the real militants, approach their leaders for negotiations, else, the 2.2m will not be achievable,” he said.
According to him, if oil hits $60 per barrel in 2017, it would however make up for the deficit should Nigeria is unable to achieve the 2.2 million barrels per day oil in 2017.
Director of Communications at the Nigerian Extractive Industries Transparency Initiative, NEITI, Orji Ogbonnaya Orji, said the body “welcomes the timely presentation of the Budget by the President and hopes that the budget will receive good attention by the NASS to pave way for timely implementation in early 2017.”
He said NEITI is yet study the details of the Budget and therefore “in no position to make informed constructive comments on the contents, spirit and basis for its revenue projections”. However, he said the body noted that with improved security in the Niger Delta through coordinated efforts, it is possible that oil production will rise to 2.2 million barrels daily.
NEITI’s review of the NNPC Monthly Financial and Operations Reports put average oil production at 2.05 million barrels per a day in quarter 1 of 2016. This fell to 1.58 million barrels in the third quarter of this year. The Reports also attributed general decline in the levels of production since February 2016 to what it called “well documented militant attacks in the Niger Delta.
” NEITI is optimistic that if the militancy is addressed, production figures would definitely improve resulting in increased revenues as may have been projected in the 2017 budget”, he said.
Energy Research Analyst with Ecobank, Dolapo Oni, said he has “no issues” with the oil price assumption.
“However, I am concerned about the oil production assumptions”, he said.
“We are yet to fully resolve the issues in the Niger Delta. They still require urgent attention and conclusion of negotiations”, he said.
Oni said the country needs “to invest more money for secondary recovery on many of our fields and bring more fields on-stream to reverse natural decline due to maturing fields aside the militancy problem” he said.
On the exchange rate, Oni said “the exchange rate assumption of N305 may not truly reflect the real value of the Naira, going by rates in the parallel market or other financial markets. The argument of the parallel market not representing the real value of the naira could be countered by the argument of how much volume now flows in the two markets. Thus, while it means we underestimate dollar earnings, it also means we are underestimating dollar expenses such as foreign loan repayments and the pressure of imports on our currency next year”, he said.


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