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Budget Squabbles as Agencies Contradict Buhari on N180b Fund

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2016 Budget
  • Budget Squabbles as Agencies Contradict Buhari on N180b Fund

As fiscal year draws to a close, the National Assembly has queried the Federal Government for failing to spend a significant portion of the N500 billion appropriated for social welfare scheme as the Presidency said it spent less than N1 billion.

Failure to spend substantial part of the fund appropriated to tackle poverty and ease the economy out of recession means that President Muhammadu Buhari’s government will struggle to get the lawmakers’ approval on pending proposals, especially the $30 billion loan meant for infrastructure building.

Special Adviser to the President on Social Protection Plan, Mariam Uwais, made a stunning disclosure to the National Assembly Joint Committees on Appropriation yesterday when she said only N25 billion had been released to the scheme. She said another N40 billion would be released before the end of the year and that a minimum of N60 billion would have been spent on the scheme before the end of the year.

“We have the framework in place but unfortunately, we did not get the release early enough,” Uwais said.

The Appropriation committees of the Senate and the House of Representatives while considering President Buhari’s request for virement of N180 billion from the N500 billion social intervention scheme to other sectors, some agencies presented sharply contrasting figures with those of the President.

The joint committee expressed shock that the Social Intervention Scheme, which was a key campaign point of the administration could be treated with disdain, to the extent that only less than one billion had been spent.

Members led by the chairman of the Senate and House of Representatives’ Committees on Appropriation, Dajuma Goje and Mustapha Bala Dawaki, respectively, raised issues about the readiness of the executive arm of government to implement the scheme.

“I don’t know if you are aware that this agency of yours is borne out of our campaign promises,” Goje, who is also a member of President Buhari’s All Progressives Congress (APC). ‘And you’re here to say that you don’t need the money. You don’t need the balance of the money, you want it appropriated to other agencies. After we have promised people that we are going to provide them money and the money will be sent to them. It’s quite sad.”

The discrepancy in the figures presented by the President and those by the agencies was first noticed in respect of the National Youth Service Corps (NYSC). The attention of lawmakers was aroused when the Director of Finance and Accounts at the NYSC, Mr. AIB Adeleke, informed the committee that the Corps only needed N8.5 billion. The President had proposed N19.792 billion for approval. A surprised Goje asked Adeleke to be sure of his facts and figures but the NYSC finance director stood his ground.

Within the few minutes given to Adeleke to get his facts right, the Senior Special Assistant to the President on National Assembly Matters (Senate), Solomon Ita Enang, rose, walked to him and spoke in low tones with him.
The Director-General of Budget, Ben Akabueze, swiftly informed the committee that Adeleke surely got the figures mixed up.

Akabueze said there was another sum of N11.2 billion which the NYSC had requested earlier in the year adding that the President simply wanted to take care of all the needs of the NYSC at once by asking for N19.792 billion.

When called upon later to declare his final position, he simply rose to say, “I agree with the submission of the DG Budget.”

Other agencies which presented conflicting figures with those of the President include Public Complaints Commission which asked the committee to approve the sum of N2.5 billion against Buhari’s N1.2 billion.

Also, the Niger Delta Amnesty Programme for which the President voted N35 billion asked the National Assembly committee to approve N35.2 billion.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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