The Nigerian House of Representatives recently directed its Committees on Finance and Petroleum to investigate claims made by the Revenue Mobilisation Allocation and Fiscal Responsibility Commission regarding the Nigerian National Petroleum Company Limited (NNPCL). Reports suggest that the NNPCL withheld N8.48 trillion as claimed subsidies for petrol. In addition, the committees are tasked with looking into the findings of the Nigeria Extractive Industries Transparency Initiative (NEITI) that alleged the NNPCL failed to remit approximately $2 billion (equivalent to N3.6 trillion) in taxes to the Federal Government. This investigation aims to verify the cumulative amount of unremitted revenue from petrol sales by the NNPCL from 2020 to 2023, amidst broader discussions on public expenditure outlined in the 2025-2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
The MTEF and FSP are critical components in formulating the country’s fiscal policies and setting budgetary expenditure targets. Specifically, the MTEF serves as a multi-year plan for public expenditure, while the FSP delineates a country’s fiscal policy within the macro-fiscal framework. These documents are integral for the budget process, ensuring that budgetary objectives are adhered to throughout each fiscal cycle. President Bola Tinubu submitted the MTEF/FSP for consideration shortly after receiving approval from the Federal Executive Council. The government’s oil price benchmark for 2025 is set at $75 per barrel, with expected oil production levels averaging 2.06 million barrels per day—indicating a concerted effort to stabilize and project revenue from the oil sector.
The debate surrounding the $75 oil benchmark sparked significant contention among House members, particularly from Minority Leader Kingsley Chinda, who argued for retaining the previous year’s benchmark of $77.96 per barrel. He highlighted that the country not only surpassed the benchmark early in 2024, but also warned against setting the bar too low considering global oil price volatility. His perspective emphasized the importance of rigorous analysis before making such critical fiscal decisions, urging lawmakers to think strategically about future oil dependency and fiscal health. Despite the concerns raised, the Chairman of the House Committee on Finance, Abiodun Faleke, defended the $75 benchmark, asserting it was a rational expectation based on market conditions rather than speculation.
In discussions about the projected increase in domestic crude oil production, which aims for an ambitious rise from 1.78 million barrels per day (mbpd) in 2024 to 2.06 mbpd in 2025, Chinda again questioned the feasibility of these targets. He pointed out discrepancies in actual production figures versus targeted projections, advocating for a more realistic aim of 2 million barrels per day instead. Chinda argued that unachievable benchmarks could lead to unplanned borrowing, exacerbating administrative fiscal challenges. Responding to these concerns, Faleke justified the higher projection, emphasizing a need to encourage operational excellence within the petroleum sector and stimulate governmental funding.
Additionally, House members expressed skepticism regarding the proposed exchange rate of N1,400 to the dollar over the coming years. Some lawmakers questioned the underlying economic realities that could justify this exchange rate, particularly in light of Nigeria’s ongoing economic transition from fossil fuels to alternative energy sources. They highlighted the essential role of currency stability in maintaining fiscal health, drawing attention to the broader implications of fluctuating exchange rates on government borrowing and overall economic stability. Reinforcing the complexity of Nigeria’s economic landscape, discussions also revealed projections for inflation rates, which were set at 15.75%, 14.21%, and 10.04% for the years 2025, 2026, and 2027 respectively.
Ultimately, the House of Representatives adopted significant components of the proposed 2025 budget, projecting total Federal Government spending at N47.9 trillion while retaining N34.82 trillion. New domestic and foreign borrowing is projected at N9.22 trillion, with a considerable focus on capital expenditure estimated to reach N16.48 trillion and statutory transfers earmarked at N4.26 trillion. Additionally, sinking funds were projected at N430.27 billion, revealing the government’s commitment to a balanced approach between expenditure and revenue generation as it navigates challenges inherent in maintaining fiscal discipline amid a dynamic economic environment.
