COVID-19: Nigeria Considers Downward Review of 2020 Budget,  Says Minister of Finance

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The fast spreading coronavirus from China is threatening Nigeria’s main source of revenue, oil.

To this end, the Federal Government is likely to review the N10.59 trillion 2020 budget passed by the National Assembly.

The budget was passed on December 5 and signed into law on December 17, 2019 by President Muhammadu Buhari.

The 2020 budget was predicated on crude oil benchmark of $57 per barrel and daily production capacity of 2.1 million barrels.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, made this disclosure while briefing State House Correspondents at the end of the Federal Executive Council (FEC) meeting, presided over by President Buhari.

Responding to a question on the drop in price of crude oil due to coronavirus and its threat to the national budget, Ahmed said: “We are concerned because it does have an impact on revenue and at the current crude oil price of 53 cent below the budget bench mark.

“What we are doing is that we are studying the situation and when the budget was passed we committed to do a midterm review.

“We will do the midterm review and if the revenues are so significantly affected, we will have to do some revisions in the budget by way of budget adjustment.

“I will want to inform that the crude production is now at 2 million barrels per day and in some days it has moved up to  2.1 million barrels per day, so that in itself will be a cushion. All the same we are not taking any measures now until we have a reasonable period we make a review and then we may need to make an adjustment of budget through working together with the National Assembly.”

The Minister said that the Council approved the memo for the issuance of Sovereign guarantee for the Ajaokuta- Kaduna- Kano has pipeline.

She said the memo was jointly presented by her ministry and that of petroleum resources.

She said: “We got Council’s approval for the issuance of sovereign guarantee to the tune of 85% of the engineering, procurement and construction, or EPC, contract for Ajaokuta-Kaduna-Kano project. This is not a new contract. It was previously approved in 2017 in the sum of $2.89 billion

“But the memo we took today is at a revised cost of $2.59 billion equivalent to a 10% discount of the original sum.”

Recall that government had awarded previous contract on a contractor financing model.

Ahmed said the “contract that has been approved today is an EPC lump sum contract with the NNPC required to pay 15 percent of the contract amount while the 85 percent would be provided by Sinopec of China in the form of a loan facility with a sovereign guarantee.

“This is a facility that has an interest rate of Nibor plus 3.7% with a 12 year repayment period and a 3 year moratorium.

“We have done an extensive review of this project and we are satisfied that the cash flows from the Ajaokuta-Kaduna-Kano gas pipeline will be sufficient to repay the facility.

“This project is one of the cardinal policies of this administration and it is very strategic to national development.”

The Minister however did not say when the project will eventually take off , but said the timeline for the project will be revealed when it is formally signed.

Minister of State for Works and Housing, Abubakar Aliyu, disclosed that the Federal Executive Council FEC approved N6.6 billion for the rehabilitation of the 1.76km Muritala Mohammed In Lokoja, Kogi State to rehabilitate the dual carriage way and bridge protection works.

FEC also approved the procurement of bird deterrent/ resistance equipment for the Kano, Enugu and Port Harcourt airports.

Aviation, Minister, Hadi Sirika, said the procurement of bird deterrent equipment is for safety operation at the three airport approved at the cost N538.1 million.

Health Minister Osagie Ehanire said federal government approved N935m for the battle of Corona virus

The minister, who briefed on the Corona virus, said “We are still working to further improve the system.

He disclosed that government has so far renovated over 4,800 Primary Health Care facilities and now fictional, as against the less than 2000 that were operational before the advent of the current  administration.

“The aspiration is to redesign the centres to function 24 hours. Staff quarters, equipped with water, 3kva generators and solar equipment.”

On his part, the Minister of Science and Technology, Dr Ogbonanya Onu, disclosed that the U.S. was currently conducting tests on a ‘chemical compound’ isolated by a former Chairman of the Independent National Electoral Commission, Prof Maurice Iwu, as a possible cure for the Covid -19.

He dismissed reports suggesting that Iwu had found a cure for Covid -19, adding that Iwu’s initial finding was that the compound could cure SARS, a strain of Covid -19.

Onu said the U.S. showed interest in the claims and had taken the compound for testing.

“They are testing it in the U.S. to confirm whether this could be a cure for Covid -19 or SARS”, he said.

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