3. The federal government and proponents of a lower benchmark have argued amongst other things about the volatility of oil prices. Unfortunately each year this argument is made and each year the argument is negated as the oil price continues every year to stay above $100. Lets assume for the purpose of argument it actually drops. Even in a cascading free fall drop to $85 which is unlikely, we will still be way above our revenue projection of $79. Now if in the unlikely event that oil price in an unprecedented fashion falls to a ridiculous all time low of say 60, 65, 70 dollars or whatever figure, we have legislative mechanism and process called amendment Bill which can be used to adjust to the reality of the time. Even without an amendment Bill there are inherent procedures and clauses in such money Bills like impoundment and virement that can be triggered by such an event. So why then should anyone be such a harbinger of bad news and fear monger to suggest that this nation will collapse should the unthinkable happen and the price of oil drops from say $100 to $60. Surely if there is a possibility that oil prices could drop so far down, then why fix it at $76.50 instead of $79. Why not $40 or $50. If it can drop to $79 what stops it from dropping to below what the senate or federal government is advocating and what happens in such an event?
Furthermore the argument has been made that the continued crude theft is another reason why the benchmark must be set lower. Now this argument seems to stand logic on its head. It appears on the contrary that having lower production or less oil to sell because of theft is the very reason we must increase our benchmark so as to make up for the loss and meet our revenue projection. Very simple. However the federal government and ministry of finance would have us believe in its fuzzy math and voodoo economics that the theft of crude should mean a lower benchmark. Many of us have always cringed at the thought of having the poor masses pay for the negligence, complicity or failure of the federal government. The same reason why we opposed the removal of subsidy. Let the federal government play its role as provided in the constitution (that the welfare of the citizenry shall be the primary purpose of government) and secure our oil and most priced commodity from theft, instead of letting the masses pay for its ineptitude.
4. As a House, we have continued to protest the consistent non-implementation of budgets. Ostensibly, the federal government continues to blame its non-implementation of budget (an illegality) on shortfall in revenue. Therefore by the government’s own inadvertent admission there is a correlation between the benchmark, which is what is used to finance the budget and budget performance. Common sense therefore dictates that a lower benchmark would mean lower budget performance. If you can only implement budget 40% when the benchmark is at a higher $79, it goes without saying that at $74 or $76.50, we should expect if lucky a 25% budget implementation and performance.
5. Budget deficit and borrowing is another reason why we insisted on retaining benchmark of $79. It is trite that once you deliberately lower your benchmark and therefore your revenue, you set yourself up for a budget deficit. It becomes imperative therefore to go to the market to borrow for the purpose of financing the budget. When this happens, not only do you commit the country to more debt at a high interest rate, the burden of which is passed on to the future generation we purport to save for through the Sovereign Wealth Fund, we also make it impossible for the real economy to grow as small businesses cannot compete with the federal government who would invariably mop up available funds for borrowing.
6. By the MTEF presented this year and due to what the executive claimed was a forecast of drop in oil revenue this year, this year’s budget supposedly has dropped its capital component by a significant 10% from about 35% of the budget in 2013 to 25% in 2014. This is in spite of Mr. President and Madam Minister of finance’s assurances that capital component will continue to rise every year. In his budget presentation to the National Assembly last year, he told the whole country and I quote:
