19 Feb

Daily Watch – Auditor-General contradicts President on Budget, Pipeline rupture hits crude oil exports

  • Nigeria’s crude oil export operation has suffered a serious setback following a major leak on an export pipeline at the Forcados export terminal. Following the incident, crude oil lifting h‎as now been suspended at that platform. A joint investigation by oilcos and the government determined that the cause of the leak was sabotage, but has yet to determine responsibility. At the moment, exports from the Forcados Oil Terminal are grounded. Nigeria is already bleeding from the impact of low oil prices, with revenue dipping month after month.
  • Electricity Distribution Companies (DISCOs) say Nigeria and Nigerians will continue in darkness, if the Senate succeeds in reversing the new tariff system. The DISCOs had initially settled for an average of 40 percent increase in tariff effective from February 1, with the approval of the National Electricity Regulation Company. The Nigerian Labour Congress protested the increase in tariff, leading the senate to call for a reversal of the tariff hike. Speaking through the Association of Nigerian Electricity Distributors (ANED) in Abuja, the DISCOs said the tariff is meant to reflect the costs that they incur in distributing power. They added that reversing the new tariff would diminish the prospects of economic growth in Nigeria.
  • The N6.08 trillion 2016 budget proposal before the National Assembly, was prepared using an envelope based framework and not zero-based as President Buhari has persistently said, according to Samuel Ukura, the Auditor-General of the Federation. Appearing before the Senate Committee on Public Accounts at the budget defence session on Thursday, Ukura told the Senator Andy Uba-led Committee that the zero-based budget was ‘hurriedly introduced’ by the Budget Office, which created some problems. The Auditor-General said while the zero-based budget was applied theoretically, in practical terms, the status quo – envelope budgeting – was maintained. Citing an example, he said the N2.9 billion budget estimate of his office in this year’s proposal, was handed over to them as an envelope by the Budget Office. The Auditor-General was responding to a question by Akpan Bassey (PDP, Akwa-Ibom North East), a member of the Committee, who asked if his office was using zero-based or envelope budgeting.
  • Data from the National Bureau of Statistics on Motor vehicle registration and Personal License Statistics shows that the number of license plates produced per state in Nigeria has reduced by 73% from 1,004,469 in 2013 to 269,795 in 2015. In contrast, the number of licenses issued have risen by 191% in the same period (2013-2015). The NBS did not say why for the drop, but operators indicate it could be due to the increase in tariff for imported cars resulting in motorists choosing to buy used Nigerian cars.
  • The naira continued its freefall, hitting a record low of N400/$ at the parallel market on Thursday as demand for the U.S. currency increased amid a plunge in crude oil prices and foreign exchange restrictions by the CBN. The CBN stopped selling foreign exchange to Bureau de Change dealers last month, the latest in a series of controls aimed at supporting the naira at a fixed peg of N197-N199 per dollar on the official interbank market since March last year. The CBN has also restricted foreign currency trading at banks, causing a shortage of dollars in an economy that imports most of its manufactured goods, sending the unofficial rate soaring.