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The
price movement at the international crude oil market in recent times
appears to have given the federal government some respite on its
proposal to re-jig the fundamentals of the 2010 budget appropriation.

A
few weeks ago, the performance of the commodity triggered anxious
moments in government circles, as the scale went below the $67 per
barrel benchmark contained in the budget by about $0.16. The
Organisation of Petroleum Exporting Countries (OPEC) basket of 12
crudes price for the week ended 25 May was as low as $66.84 per barrel,
sending jitters down the spines of government officials, most of who
fretted on how the three tiers of government would fund their
allocations from the Federation Account, which is dependent almost
entirely on revenue earnings from oil exports.

Remi
Babalola, the minister of state for finance, told journalists at the
end of the last the Federation Accounts Allocation Committee (FAAC)
that it resorted to the ‘Doctrine of Economic Pragmatism’ to handle the
stalemate that resulted in last month’s revenue allocation meeting by
proposing a re-jig of the budget fundamentals.

Scaling down benchmark

The
proposal to the National Assembly is for the crude oil benchmark to be
scaled down to an average of $59 and $55 barrels per barrel, while the
country’s daily oil production capacity would be lowered to an average
of two million barrels. The re-jig process would, however, have to wait
for members of the National Assembly to return from their recess next
week to deliberate on the proposal.

Crude
oil market fundamentals as at yesterday showed the price of OPEC basket
of 12 crudes for the week ended 11 June registering a marginal climb to
$72.29 per barrel, from $72.21 the previous day.

Brent
crude price recorded a $1.71, or 2.32 percent climb from $73.78 at the
weekend to $75.49 per barrel, to give government some breathing space
to await the intervention of the National Assembly in the budget
provision from next week. Mr. Babalola also noted that the federal
government was commitment to the improvement of available data on
Federation Account allocation to all tiers of government in the country
to inspire confidence of all.

Declining earnings

The
declining earnings from oil exports in recent times as a result of
sliding prices at the international market had heightened the call for
all tiers of government to step up efforts to explore alternative
sources of revenue, particularly their internally generated revenue
(IGR) sources, rather than wait for allocations from the Federation
Account every month. Reliance on Federation Account allocation by the
three tiers of government has exerted enormous pressure on the saving
in the Excess Crude Account (ECA), resulting in the depletion of their
balances.

Ibrahim Dankwambo, the accountant general of the federation, said
recently that about $4.6billion is left as balance in the foreign
excess crude account, prior to the disbursement of about N339.627
billion to augment the arrears of allocation to the three tiers of
government for January to April stood at about $5.193billion, while
only N89billion is in the domestic excess crude account.