Oil rises after bigger-than-expected drop in U.S. inventories

FG plans to amend 2020 budget oil benchmark to $20 to be halted

The Federal Government of Nigeria plan to review 2020 budget may be halted as hope rekindle in the global price of oil.

Now, oil is showing signs of recovery and it has been predicted to increase further as global lockdown eases.

Wednesday oil data shows that Brent crude increased hit above $30 per barrel, though it had gone below $20 in the recent time.

Analysts are predicting further surge, though oil price may not hit $57 used as benchmark for preparing the budget.

It could be recalled that plans were ongoing by the Federal Government to review the 2020 budget to reflect an oil benchmark of $20 per barrel.

A report by Reuters quoted the Minister of Finance, Budget and National Planning Minister, Zainab Ahmed, who disclosed this on Tuesday during a web conference about the impact of low oil prices on Nigeria’s economy.

A further downward revision will mean that the Federal Government has now dropped the benchmark from an initial $57 per barrel to $30.

The report said Mrs Ahmed also intimated on plans by FG to cut oil production to 1.7 million barrels per day (mbpd), from the 2.1 mbpd previously proposed in the budget.

“We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel.”

Other key highlights from the conference include; plans to defer debt service obligations to 2021 and beyond until macro conditions improve.

An 80% drop in estimated net oil & gas revenue available for Federation Account Allocation Committee (FAAC) distribution to N1.1 trillion against the N5.5 trillion previously earmarked.

A marginal drop in Customs projected revenue to N1.2 trillion in 2020 from the previous N1.5 trillion.

While the amount accruable to the federation account is now projected at N3.9 trillion from the initial N8.6 trillion.

The government is also looking at providing support for the aviation sector as part of measures to alleviate the impact of COVID-19

FG plans to amend 2020 budget oil benchmark to $20 to be halted

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