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A new budget bench-marking approach aimed at preventing the misappropriation of excess crude oil proceeds has been proposed by the Revenue Mobilization, Allocation and Fiscal Commission, Daily Trust has gathered.
Explaining the new benchmarking approach to Daily Trust in an exclusive interview at the weekend, the Chairman of RMAFC, Engineer Hamman Tukur said the proposal became necessary because several billions of dollars realised from excess crude oil between 2004 and February 2008 have not been accounted for by the government, while a balance of $13.95 billion from the proceeds is lying idle in the "illegal Excess Revenue Account". He said the new budget benchmarking approach "is a simple and practical process whereby a predetermined crude oil benchmark is allocated to specific priority projects such as power, railways and other critical infrastructures. It is deliberately designed to allow for the fixing of benchmark tied to specific priority projects without negatively impacting on the minimum cost of governance as already contained in the 2008 budget". According to him, the new benchmarking would translate crude oil revenue into infrastructural development as against the current system that encourages misuse of the proceeds and the keeping of part of it in the dormant Excess Crude Account. Tukur lamented that under the existing benchmarking approach, "the differences between the predetermined benchmarking and the actual sales of crude oil are not properly accounted for and the system has led to the creation of illegal Excess Crude Account amidst infrastructural decays." He explained that a substantial part of the excess crude proceeds realised between 2004 and 2008 were yet to be accounted for, saying, in 2004 for example, the approved crude oil price benchmarks was $25 per barrel but oil was sold on the average of $40.72 per barrel and the difference of $15.72 per barrel has not been accounted for. "In 2005, the $27.76 per barrel difference between the approved $30 per barrel and the average sales of $57.76 per barrel was never accounted for. Same in 2006 where $16.51 per barrel excess was not accounted for after the country recorded an average of $51.51 per barrel as against the approved benchmark of $35 per barrel. Also in 2007, the approved benchmark which the budget was based was $59 per barrel but before the year expired, the oil was sold for an average of $67.24 per barrel and the $27.24 per barrel differences was never accounted for. The 2008 budget was based on the benchmark of $59 per barrel and presently, the price of crude oil has risen to over $95 per barrel, he said. He explained that "the revenue commission has gone to the National Assembly on several occasions to contest the differences and ask why they have never been captured in the budget. What happened to these monies? Nigerians would want to know", Tukur said. The new approach, according to the RMAFC, only considered the Federal Government for now and it is meant to determine the volume of crude oil due to FG by applying the existing Revenue Allocation Formula. "This is a deliberate approach designed to reduce inflation through the importation of capital goods because the demands of the identified sectors are largely to be sourced outside the country and are therefore, within the Policy Support Instrument (PSI) of the World Bank and the IMF, thus the fear of inflation will not arise", Tukur said.
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