REPORT OF THE SENATE JOINT COMMITTEE ON FINANCE, APPRORIATIONS, NATIONAL PLANING AND PETROLEUM RESOURCES (UPSTREAM), ON THE NEED TO CONSTANTLY ASSESS, EXAMINE AND SUGGEST TO THE SENATE ON THE URGENT STEPS TO BE TAKEN ON THE ECONOMIC SITUTION OF THE SHARP DROP IN OIL PRICES AND OTHER ECONOMIC ISSUES CAUSED BY THE OUTBREAK OF THE DEADLY CORONAVIRUS/COVID-19, AND THE UPROAR BETWEEN THE GOVERNMENTS OF SAUDI ARABIA AND RUSSIA.
1.1 INTRODUCTIONThe Senate at its sitting on Tuesday 10th March, 2020, after a point of order by the Leader of the Senate, Sen. Yahaya Abdullahi, on the urgent need to monitor and examine the current Economic Reality which was occasion as a result of sharp drop in the price of Crude Oil, the emergence of deadly virus Coronavirus/Convid-19 and the uproar within the OPEC Community.
The Senate resolved to set up a Joint Committees of Finance, Appropriations, National Planning and Petroleum Resources (Upstream), to look into the current economic realities and report back to the Senate on a weekly basis or when the need arises, by interfacing with the relevant Stakeholders in the Executive and Business Community with the intention of bringing out suggestions, solutions and way forward out of the present Economic Reality.
1.2 MEMBERSHIP1. Sen. Solomon O. Adeola - Chairman Joint Committee and Chairman Committee on Finance2. Sen. Jibrin Barau- Chairman Committee on Appropriations3. Sen. Olubunmi A. Adetunmbi- Chairman Committee on NationalPlanning 4.Sen. Albert Akpan Bassey-Chairman, Petroleum Resources (Upstream) 1.3 IN ATTENDANCE1. Hajia Zainab Ahmed – Minister of Finance; Budget and National Planning 2.0 JOINT COMMITTEE’S BRIEFINGSThe Joint Committee held it inaugural meeting on Wednesday 11th March 2020, with the Chairmen of the Joint Committees and the Honourable Minister of Finance, Budget and National Planning in attendance. The Joint Committee discussed wide range of issues bordering on the current economic realities which includes:i. The current Appropriation Act 2020 passed by the National Assembly;ii. Cost of production of a barrel of crude oil compared with the other counterparts in the Petroleum Producing Countries;iii. The reality of the current situation of the Government in terms of number of agencies and parastatals of the Government putting into perspective the Oronsanye Panel Report;iv. The need to prioritise both the Social and the Real Sector of the economy looking at their importance to the overall benefit of Nigeria;v. Loss of revenue as a result of Gas flaring which runs into several billions of dollars;vi. Devaluation of Naira;vii. Removal of oil subsidy;viii. And other sundry issues was considered.The Joint Committee looked at the issues discussed from two (2) angles; the short and long term solution. The short term solution is to address the sharp drop in the crude oil price which is creating difficulties in funding the 2020 Appropriation Act as passed by the National Assembly. The long term solution discussed is the need to consider and pass the Petroleum Industry Bill (PIB), which is yet to laid before the National Assembly. This will address the issue of cost of production and Gas flaring where the country’s resources is going down the drain and other issues that might affect the petroleum sector.2.1 EXPERT OPINIONAlso as part of the fact finding mission of the Joint Committee on the effect of the Corona Virus / COVID-19 and the sharp drop of crude oil price, we sought and receive different views from experts in finance and economy on the state of the economy and other wide range of issues as it affects the economy. These include:1) Devaluation of Naira: while the Federal Government has come out to tell Nigerians that devaluation of Naira is not on its agenda as the recent drop in the price of oil necessitated the recent drop in the value of Naira and rise in the value of Dollar, which experts believe will be over as soon as a solution is found to COVID – 19 and the price war between OPEC members i.e Saudi Arabia and Russia is over.2) Also experts believe that fund from internal loans and bonds sourced from the Capital Market should be mobilized to fund infrastructural development, a model exemplified by India with population of 1.1 Billion people, as this will be much cheaper for us as a Nation.3) Allowing fund taken out of the country to be returned back into the economy without destroying the anti-corruption war of the President by providing legal instrument to ensure the return of this fund.4) Experts believe it is time Nigerian should start to look beyond oil as a major source of revenue to the Government and ensuring proper diversification of the economy.5) Experts noted that our shallow policy in Agriculture is responsible for our dependency on oil as our major source of income. The Government should show more commitment in returning the country as a major leader in agricultural produce both within and outside the African Continent e.g Nigeria was the leading producer of cocoa but as over taken over by Ivory Coast as number one producer, since the advent of crude oil.2.2 BUDGET IMPLEMENTATIONOn the issue of budget implementation for 2020, the Minister of Finance through the Accountant General Office informed the Joint Committee that Budget implementation has since commenced with relevant releases ranging from Personnel and Overhead Cost for the month of January & February in accordance with the Appropriation Act passed by National Assembly. Other statutory finance obligations for the month of January & February has since been met, which includes Statutory Transfer, Pension, and Payment of Debt both Foreign and Local. The Capital releases for the first quarter commence by second week in March with the sum of N340 billion to be released to the critical sector of the Economy such as Transport, Agriculture, Works and Housing, Health and other Social and Real sector has commenced. The effects of the sharp drop in the crude oil price will be felt with the effect from May, June and July from our findings. 3.0 RECOMMENDATIONSIn the interim the Joint Committee, after exhaustive discussion between the Committee and the Honourable Minister of Finance, agreed to;i. Continue to engage the Joint Committee on a regular basis so as to keep them abreast of the current ongoing in the Executive Arm, in line with the Nine Man Committee setup by the President;ii. The downsizing of the Appropriation Act 2020 as passed by the National Assembly is inevitable, but the modalities to be adopted in the reduction of the budget must be used as suggested by the Appropriation Chairman and agreed to by the Joint Committee;iii. That the revenue generating agencies must be alive to their responsibility in line with the Fiscal Responsibility Act passed by the National Assembly and other relevant laws of the National Assembly;iv. That other issues affecting the oil sector such as cost of production of a barrel of Crude oil and any other matter taken care off in PIB;v. That the Joint Committee will invite other relevant Stakeholders to an interactive session. The Stakeholders are; Central Bank of Nigeria, Nigerian National Petroleum Corporation, Ministry of Finance, Budget and National Planning; and also engage relevant Stakeholders in the Business community for their own inputs and suggestions on the way forward of the present economic realities;vi. The Committee adjourned accordingly to Thursday 12th March, 2020 for further discussion;vii. The meeting of Thursday 12th March, 2020, by the Joint Committee resolved to adhere strictly to all suggestion and position taken at the last meeting. 4.0 CONCLUSION:This is the interim report of the Joint Committees of Finance; Appropriations; National Planning; and Petroleum Resources setup by the Senate.The Committee expresses appreciation to the Leadership of the Senate and also thank the entire Members of the Joint Committee who work assiduously to ensure timely completion of the report. REPORT OF THE SENATE JOINT COMMITTEE ON FINANCE, APPRORIATIONS, NATIONAL PLANING AND PETROLEUM RESOURCES (UPSTREAM), ON THE NEED TO CONSTANTLY ASSESS, EXAMINE AND SUGGEST TO THE SENATE ON THE URGENT STEPS TO BE TAKEN ON THE ECONOMIC SITUTION OF THE SHARP DROP IN OIL PRICES AND OTHER ECONOMIC ISSUES CAUSED BY THE OUTBREAK OF THE DEADLY CORONAVIRUS/COVID-19, AND THE UPROAR BETWEEN THE GOVERNMENTS OF SAUDI ARABIA AND RUSSIA ______________________________________________________Sen. Solomon O. AdeolaSen. Jibrin BarauChairman, Joint CommitteeChairman, Committee on AppropriationChairman, Senate Committee on Finance ______________________________________________________Sen. Olubunmi A. AdetumbiSen. Albert Bassey AkpanChairman, Committee on NationalChairman, Committee on PetroleumPlanning & Economic AffairsResources (upstream) 4