The Federal Government said yesterday that in 2006, the nation lost an estimated N570 billion in revenue due to protracted crisis in the Niger Delta region, which also affected the federal budget by N216 billion.
Making this disclosure in Abuja at the 2007 Ministerial Budget Briefing, Finance Minister, Mrs. Nenadi Usman, said having realised the impact of such loss on the its ability to fully implement the budget, it approached the National Assembly for approval to draw from the excess crude proceeds account for the same amount.
According to her, �Early in the second quarter of 2006, there was a loss of production of 600,000 barrels per day from Joint Venture operations. The loss was due principally to social disruptions in the Niger Delta, which continued until the end of fiscal year 2006.
“The result was that crude oil sale fell by 3.2 per cent below our projected target while petroleum profit tax fell by 10.9 per cent. This translated into revenue losses in the Federation Account totalling an estimated N570 billion. The impact on the Federal Budget was about N216 billion.”
She continued: “By July 2006, during our mid-year review we had a clear idea of the impact on our ability to fully run the 2006 budget. Therefore, we sought and received the approval of the National Assembly to draw the sum of N570 billion from the excess implementation of the budgets of the federal, state and local governments.
“Half of this sum was distributed immediately while the other half was distributed in October after we carefully reviewed the situation for the fiscal year.”
Nenadi, however, noted that to permanently resolve the lingering crisis, the Federal Government had continued to engage all the stakeholders in the Niger-Delta region. “Today, we have made significant progress towards developing a better understanding of the problems of the Niger Delta and constructive steps have been taken to put permanent solutions in place.
“We expect that our efforts in this area will continue and even intensify in 2007 and as a result, we believe that the social and economic disruptions, which we witnessed in the Niger Delta will not persist in 2007,” she stated.
The minister revealed that the Federal Government could not achieve the target of N1.6 trillion projected revenue for 2006 as only N1.4 trillion was raked in as December 31, 2006.
The scenario, she added, had increased the budgeted deficit of N378 billion to N426 billion, which was financed through “four principal sources: privatisation proceeds, domestic borrowing of N45 billion, LNG dividends of N13 billion and the sum of N25 billion of 2005 unutilised votes in the Central Capital accounts.”
She further pointed out that “on the non-oil side, value added tax (VAT) and company income tax (CIT) performed slightly above our projected sum. A total of N31 billion was realised as at December 31, 2006 as VAT proceeds while N108.8 billion was collected as CIT as against the projected sum of a little over N107 billion.
“These are marginal increases in our collection rates but against the backdrop of the reforms in the Federal Inland Revenue Service we can appreciate the emerging positive trend.”
She however noted that “we did not witness a corresponding positive trend in the collection rate for customs duties in 2006. Proceeds from customs collection as at the end of the fourth quarter of 2006 stood at N80 billion as opposed to our projected sum of N88.9 billion.”
She attributed “the weak collection throughout the year to the complexities of the ongoing customs reform. We believe that, in 2007, customs collection will improve given the progress so far achieved in the reform efforts at the Customs Service.”
Nenadi said, in total, appropriation of N91.2 billion for transfers has been released adding that “for debt service, implementation stood at N248.4 billion or 86 per cent of the appropriated N290 billion.
“The recurrent (non-debt) expenditure comprising payroll and overheads was implemented in full. For capital expenditure, almost the entire appropriated amount of N567 billion has been released as planned.”
Speaking on 2007, Nenadi said she would sign the actual warrants for release of first quarter allocations for spending ministries, departments and agencies (MDAs) next week.
She disclosed that the budget office was already preparing the warrants, which would cover both the recurrent and capital votes for the quarter.
“The Director-General of the Budget Office of the Federation is already in the process of preparing the General Warrants against the 2007 budget for Recurrent and Capital expenditures and I would be signing these shortly thereafter.
“Let me assure you that all the warrants will be signed two clear weeks before the end of January 2007. I would like the august assembly to note that these are provisional warrants,” she said.
In his presentation of the 2007 Budget Breakdown, Director-General, Budget Office of the Federation, Mr. Olabode Agusto said, the N579 billion deficit from the N2.3 trillion budget will be financed from the sale of government properties (N125 billion); domestic borrowing from the bond markets (N200 billion) and statutory funds (N100 billion).
He pointed out that from the 2007 budget which has an expected revenue of N1.729 billion, N326 billion would be used for debt servicing while spending MDAs will draw a total of N1.88 trillion and N102 billion will be for statutory transfers.
He pointed out that, from the total debt service figure of N326 billion, N61 billion (a reduction from N181 billion of 2005) would be used to service foreign debt while N265 billion has been appropriated for domestic debt service.
He pointed out that the increase in domestic debt stock has compelled government’s borrowing of N200 billion to fund this year’s budget, N75 billion pension bonds, contractors� bond N150 billion, Agusto who stated that the 2007 budget was about delivering economic growth and wealth creation, reducing poverty and achieving the Millennium Development Goal as well as ensuring macroeconomic stability, disclosed that N110 billion representing 10 percent above 2006 appropriation has been included in the 2007 budget with a view to achieving the targets of the Millennium Development Goals (MDGs).
Breaking it down, he said N15 billion has been earmarked for agriculture in the areas of rehabilitation of 102 grazing reserves, water harvesting technologies in five states and construction of 12,500 metal storage bins, 6, 250 brick grains store and 2,500 fish kilns.
He added that under the MDGs, N20 billion has been budgeted for conditional grants to states and the federal Capital Territory (FCT) while N10 billion is for social safety nets. In addition, he noted, N15.4 billion was appropriated for Education to cater for in-service training of 145,000 teachers and retraining of 40,000 teachers, girls� education, and training of additional 5,000 teachers in science.
In the Health sector, he said N20.6 billion was earmarked for the construction and equipment of 110 model primary health centres, and vaccination with 250 million doses of basic vaccines being procured; 37 million doses of bundled vaccines and 3,000 doses of tuberculosis drugs.
Agusto noted that additional infrastructure expenditure would gulp N499 billion. According to him, N128 billion will be expended on power; N37 billion on railway; OK pipeline N67 billion; Brass LNG, N244 billion; Gas Supply to IPP, N53 billion.
Jan92007