BUDGET 2017 MAJOR HURDLES
As usual it was nice listening to President Buhari's more focussed and inclusive budget speech while he presented 2017 N7.28tr budget today at the joint session of the National Assembly.
To an extent, it looked like the President was woken up to an extent from his illusory projections and hopes for 2016 after all by events this year.
But budget 2017 still has some major hurdles to cross in the near future to become a true working and realistic document.
First, is the fact that it is based on no more cash calls for the nations production sharing arrangement with exploration and producing companies.
From January, he said, a new arrangement that involves cost recovery before any sharing of surplus will take effect thus freeing Nigeria from scouting for scarce foreign to match commitment by joint venture partners. An arrangement that found Nigeria in arrears and thus becoming a drag especially in deep water activities.
The only main snag is the fact that it is doubtful if Nigeria will not end up being dependent on the partners for cost and production statistics since the industry watchdog is very weak, ill equipped,and continues to pray for the day new proposed laws for the industry will see the light of day.
Another challenge comes from predicating the budget on 2.2mbd production at $4.50 per barrel. While the price projection looks more feasible now given recent OPEC deals on cutbacks, Mr President will have to come out with a workable agreement and body language to ensure that the Niger Delta militancy is tryly a thing of the past. Crocodile smile will not guarantee this.
Thirdly, budget 2017 is about 30.6% a deficit budget with the rather ambitious hopes of raising a substantial part of this from from external sources. That could turn out to be one very tall hope given today's realities.
(Next instalment: Do the President's plans and decisions match his words?)
To an extent, it looked like the President was woken up to an extent from his illusory projections and hopes for 2016 after all by events this year.
But budget 2017 still has some major hurdles to cross in the near future to become a true working and realistic document.
First, is the fact that it is based on no more cash calls for the nations production sharing arrangement with exploration and producing companies.
From January, he said, a new arrangement that involves cost recovery before any sharing of surplus will take effect thus freeing Nigeria from scouting for scarce foreign to match commitment by joint venture partners. An arrangement that found Nigeria in arrears and thus becoming a drag especially in deep water activities.
The only main snag is the fact that it is doubtful if Nigeria will not end up being dependent on the partners for cost and production statistics since the industry watchdog is very weak, ill equipped,and continues to pray for the day new proposed laws for the industry will see the light of day.
Another challenge comes from predicating the budget on 2.2mbd production at $4.50 per barrel. While the price projection looks more feasible now given recent OPEC deals on cutbacks, Mr President will have to come out with a workable agreement and body language to ensure that the Niger Delta militancy is tryly a thing of the past. Crocodile smile will not guarantee this.
Thirdly, budget 2017 is about 30.6% a deficit budget with the rather ambitious hopes of raising a substantial part of this from from external sources. That could turn out to be one very tall hope given today's realities.
(Next instalment: Do the President's plans and decisions match his words?)
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