The Federal Government has concluded plans to peg the price of a barrel of crude oil at $78 and also fixed the exchange rate of a dollar to N160. It is expected to take effect in the 2015 budget.
This disclosure was contained in the Medium Term Expenditure Framework, MTEF and Fiscal Strategy Paper, FSP sent to the Senate by President Goodluck Jonathan and is $4 higher than that of 2014.
Jonathan had last year proposed $74 as the benchmark price for the 2014 budget but both chambers of the National Assembly, after several days of disagreement, finally put it at $77.5 per barrel.
The President, in a letter that accompanied the documents, noted that the MTEF and FSP were prepared against the backdrop of the global economic uncertainties and developments in the domestic environment.
He said the $78 proposed oil benchmark was to ensure that planned spending was set at prudent and sustainable level and was consistent with government’s overall development set out in the transformation agenda of his administration.
In fixing the oil benchmark, the MTEF stated that the proposal was driven by the need to be cautious in the revenue projections given the volatile nature of oil prices and the need to build the nation’s fiscal buffers, which had been very useful in periods of revenue shocks.
The document also set oil production projection for 2015 at 2.2782 million barrel per day, which is lower than the 2.3883 million bpd programmed for this year. The crude production projection for 2015, according to the document, is predicated on present realities in the oil sector and extensive consultations with relevant stakeholders.