BIG STORY

CBN Slams Heavy Sanctions On Diamond Bank, 3 Others For Aiding MTN’s Forex Infractions

Published

6 years ago

August 30, 2018

The Central Bank of Nigeria says it has imposed heavy sanctions totaling N5.87 billion on four banks under its regulatory purview and asked same to refund the sum of $8,134,312,397.63 for what it described as “flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006’.

The four banks that have come under the sledgehammer of the CBN for the violations are Standard Chartered Bank, Stanbic-IBTC, Citibank, and Diamond Bank.

Announcing the decision in Abuja on Wednesday, CBN’s Director, Corporate Communications, Isaac Okorafor, said the actions on the Bank became necessary following allegations of remittance of foreign exchange with irregular Certificates of Capital Importation issued on behalf of some offshore investors of MTN Nigeria Communications Limited and subsequent investigations carried out by the apex bank in March 2018.

The CBN has therefore asked the Managements of the banks and MTN Nigeria Communications Limited to immediately refund the sum of $8,134,312,397.63 illegally repatriated by the company to the coffers of the Central Bank of Nigeria.

Figures obtained from the CBN on Wednesday indicate that the highest fine of N2,470,604,767.13 was slammed on Standard Chartered Bank, while Stanbic IBTC Nigeria was fined the sum of N1,885,852,847.45.

For its punishment, Citibank Nigeria was penalized in the sum of N1,265,541,562.31, just as Diamond Bank was directed to pay the sum of N250 million for violating extant rules.

The CBN Spokesman further disclosed that the decision on the Bank followed thorough investigations by it into the allegations of remittances by the four banks of forex with irregular certificates of Capital Importation issued on behalf of some offshore investors of MTN Nigeria Communications Limited.

Okorafor said the investigations revealed that the sum of $3,448,119,321.72 was repatriated by Standard Chartered Bank on the basis of the illegally issued CCIs.

Similarly, he said the sums of $2,632,005,623.78, $1,766,263,212.75 and $348,914,501.30 were repatriated by Stanbic IBTC Nigeria, Citibank Nigeria and Diamond Bank Plc, respectively during the period 2007 and 2015. Accordingly, he said the CBN had directed the affected banks to immediately refund the respective sums to the CBN.

The CBN investigation further revealed that on account of illegal conversion of MTN shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated by the company.

While disclosing that the investigations by the CBN took a while in order to carry out thorough inquiry and give fair hearing to all parties involved, Mr. Okorafor advised all banks and multinational companies in Nigeria to adhere strictly to the provisions of all extant laws and regulations of Nigeria in their foreign exchange transactions. He warned that failure by the management of banks and companies to abide by the existing guidelines would be appropriately sanctioned, which sanctions may include denial of access to the Nigerian foreign exchange market.

Details of the Investigations

CBN’s letter to MTN says:

Our investigation also revealed the following, among others:

i. The shareholders of your company invested the sum of $402,590,261.03 in the company from 2001 to 2006;

iii. The CCIs issued at the time of the investment by the above banks to your organization in respect of the $402,590,261.03 showed that $59,436,923.44 was invested as shareholders’ loan and $343,153,339.56 as equity;

iv. However, a review of your organization’s financial statements for the year ended December 31, 2007 revealed that $399,594,146.00 was recorded/invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by the banks in (iii) above;

v. Following a request by your organization through Standard Chartered Bank for CBN’s approval to convert the shareholder’s loan to preference shares, an approval-in-principle was granted vide our letter dated November 13, 2007; with the grant of final approval made subject to the fulfillment of the following conditions by your organization.

a. Implementation of the decision in item 5B of your board resolution dated November 08, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the Central Bank of Nigeria; and

b. Provision of an undertaking that no remittance for either interest or principal repayment would be made to the shareholders from the date of the loan to the date they were converted to preference shares.

vi. In spite of the non-fulfillment of the conditions in (v) above and consequently, the non-issuance of a final approval by the CBN, your organization converted the shareholders’ loan to preference shares with Standard Charted Bank issuing new CCIs in respect of the illegal conversion;

vii. The action of your banker in aiding your organisation in the illegal conversion of the shareholders’ loan was later described by SCB in a letter to the CBN dated December 10, 2009 as an “unintended omission”; and

viii. On account of the illegal conversion of your shareholders’ loan to preference shares (interest free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated on behalf of your company by the aforementioned banks between 2007 and 2015.

CBN’s Letter to Standard Chartered bank says:
Our investigation also revealed the following, among others:

i. The shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006;

ii. The investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by your bank, Citi Bank (CB) and Diamond Bank (DB) at the initial stage of the investment.

iii. The CCIs issued at the time of investment by your bank along with the other banks in respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested as shareholders’ loan and $343,153,339.56 as equity. This position was, however, contrary to the position in the financial statements of MTN Nigeria Communications Limited for the year ended December 31, 2007, which revealed that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by your bank, Citi Bank (CB) and Diamond Bank (DB). Your action in this regard constituted a rendition of false returns to the Central Bank of Nigeria.

iv. Your bank subsequently applied to the CBN on behalf of MTN Nigeria Communications Limited for the conversion of the shareholder’s loan to preference shares, for which an approval-in-principle was granted vide our letter dated November 13, 2007 with the grant of final approval made subject to the fulfillment of the following conditions by MTNN:

a. Implementation of the decision in item 5B of MTN Nigeria Communications Limited board resolution dated November 8, 2007 and submission of documentary evidence to that effect to the Director, Trade and Exchange Department of the Central Bank of Nigeria; and

v. In spite of the non-fulfillment of the above conditions in (iv) above and consequently, the non-issuance of a final approval by the CBN, your bank issued new CCIs in support of the illegal conversion of the shareholders’ loan to preference shares; an action that was later described by your bank in a letter to the CBN dated December 10, 2009, as an “unintended omission”; and

vi. On account of the illegal conversion of the shareholder’s loan to preference shares (interest-free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated by your bank and the other banks on behalf of MTN Nigeria Communications Limited between 2007 and 2015.

Other findings from our investigation included the following:

1. Your bank issued three (3) CCIs outside the regulatory 24 hours without the approval of the CBN;

2. In contravention of Memorandum 24 (ii) of the Foreign Exchange Manual, which requires that CCIs should be transferred based on customer’s instructions to a bank of the customer’s choice along with the transaction history of the CCI, you provided confirmation to two other banks, Citibank and Diamond Bank, instead of transferring the CCIs to them as required by the Foreign Exchange Manual.

The two banks on the strength of your confirmation subsequently remitted various sums as dividend for MTN Nigeria Communications Limited at different times; and

3. Your bank failed to issue a letter of indemnity to the CBN against double remittance in respect of ten CCIs transferred by Diamond Bank and Citibank to your bank as required under subsection 5(iii) of Memorandum 24 of the Foreign Exchange Manual.

Upon the conclusion of the investigation, the Committee of Governors of the Central Bank of Nigeria met with the management of your bank and the other banks as well as representatives of MTN Nigeria Communications Limited in Lagos on May 25, 2018. This was to give all the parties fair hearing, towards taking an informed decision on the matter.

CBN’s letter to Stanbic-IBTC says:

Our investigation also revealed the following, among others:

i. The shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006;

ii. The investment was carried out through the inflow of foreign currency cash transfers and equipment importation, which was evidenced by the CCIs issued by Standard Chartered Bank, Diamond Bank and Citibank, out of which eight of the CCIs totaling $377,216,508.30 were transferred to your bank by Standard Chartered Bank.

Consequently, your bank repatriated the sum of $929,051,331.83 as proceeds of divestment from the CCIs valued at $42,704,408.61.

iii. On account of the illegal conversion of the shareholders’ loan to preference shares (interest-free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated by your bank and the other banks on behalf of MTN Nigeria Communications Limited between 2007 and 2015.

Other findings from our investigation included the following:

a). Your bank falsely reported thirty-five CCIs valued $313,683,925.84 inappropriately as “other purchases” in your MTR 203 returns for February 2008 instead of “capital importation”;

b) Your bank issued eight CCIs of $58,359,616.67 in respect of foreign exchange sourced locally as shareholders’ loan. This constituted a contravention of the requirement of Section 15 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and Memorandum 20 (1.3) (iii) of the Foreign Exchange Manual, which stipulates that CCIs should only be issued on capital imported;

c). Your bank issued eight CCIs for capital inflows in form of machinery outside the 24 hours regulatory requirement of receipt of shipping documents in contravention of paragraph 4.1.1 (IV) of the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2012 to 2013;

d) Your bank failed to issue a letter of indemnity to the CBN against double remittance in respect of twenty CCIs transferred by Standard Chartered Bank to your bank as required under subsection 5(iii) of Memorandum 24 of the Foreign Exchange Manual; and

e) Your bank repatriated dividends totaling $905,260.20 in respect of CCIs illegally issued on the strength of locally sourced capital.

CBN’s letter to CitiBank says:

Our investigation also revealed the following, among others:

i. The shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2001 to 2006;

ii. The investment was carried out through the inflow of foreign currency cash transfer and equipment importation evidenced by the CCI issued by your bank, Standard Chartered Bank and Diamond Bank;

iii. The CCIs issued by your bank along with the other banks in respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested as shareholders’ loan and $343,153,339.56 as equity at the time of the investment. This position was, however, contrary to the position in the financial statements of MTN Nigeria Communications Limited for the year ended December 31, 2007, which showed that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by your bank, Standard Chartered Bank (SCB) and Diamond Bank (DB). Your action in this regard constituted a rendition of false returns to the Central Bank of Nigeria;

iv. Your bank issued seven (7) CCIs to MTN Nigeria (MTNN) totalling $42,126,803.04 that were subsequently transferred to Standard Chartered Bank Limited at the request of your customer (MTNN) on February 6, 2006, which constituted part of the CCIs that were consequently irregularly re-issued;

v. Four of the CCIs issued by your bank evidencing the inflow of capital imported as cash were issued outside the period of 24 hours allowed by regulation upon the receipt of inflow, in flagrant contravention of Memorandum 22 of the Foreign Exchange Manual;

vi. Your bank failed to comply with extant regulations on the issuance of letter of indemnity to the CBN in addition to forwarding the transaction history of the CCIs to the CBN, as provided in Memorandum 24(5)(ii)(b) of the Foreign Exchange Manual in respect of the CCI received by your bank from Standard Chartered Bank; and

vii. Your bank purchased $535,000,000 on the basis of photocopies of Form “A” bearing the name of Standard Chartered Bank as the applicant bank and the referenced CCIs in contravention of Memorandum 24 (4) (a) of the Foreign Exchange Manual 2006.

CBN’s letter to Diamond Bank says:

Our investigation also revealed the following, among others:

I. The shareholders of MTN Nigeria Communications Limited invested the sum of $402,590,261.03 in the company from 2011 to 2006;

II. The investment was carried out through the inflow of foreign currency cash transfer and equipment importation, which was evidenced by the CCI issued by your bank, Citi Bank and Standard Chartered Bank;

III. The CCIs issued illegally by your bank along with the other banks in respect of the $402,590,261.03 showed that $59,436,923.44 was recorded/invested as shareholders’ loan and $343,153,339.56 as equity. This position was, however, contrary to the position in the financial statements of MTN Nigeria Communications Limited for the year ended December 31, 2007, which showed that $399,594,146.00 was invested as shareholders’ loan and $2,996,117.00 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by your bank, Citi Bank (CB) and Standard Chartered Bank (SCB). Your action in this regard constituted a rendition of false returns to the Central Bank of Nigeria; and

IV. On account of the illegal conversion of the shareholder’s loan to preference shares (interest-free loan) of $399,594,146.00, the sum of $8,134,312,397.63 was illegally repatriated by your bank and the other banks on behalf of MTN Nigeria Communications Limited, within a period of six years.
Other findings from our investigation included the following:

a) Your bank issued three CCIs in favour of Dantata Investment for the sum of $5million without converting the foreign exchange received into Naira as required by our regulations. On the basis of these illegally issued CCIs, your bank repatriated the sum of $102,545,336.77 in respect of these CCIs;

b) A further review of the CCIs also showed that no Form “M” was opened as evidence of the utilization of the FX for the importation of goods (as “Not valid for FX”) into the country;

c) Your bank remitted the sum of $348,914,501.38 as the dividend to MTN Nigeria Communications Limited offshore corporate shareholders without any documentary evidence of the audited account of the company to justify the basis of the payment of the dividend declared and paid by MTNN. This action was a violation of the provision of Memorandum 24(4)(b) of the Foreign Exchange Manual;

d) Your bank failed to indemnify SCB for losses and/or liabilities that may arise from the use of the CCIs you transferred to SCB in violation of the provisions of the Foreign Exchange Manual 2006;

e) Your bank issued three CCIs outside the regulatory 24 hours without the approval of the CBN contrary to provisions of Memorandum 22 of the Foreign Exchange Manual 2006; and

f) Your bank illegally remitted the sum of $352,222,358.39 on behalf of Standard Chartered Bank and Stanbic IBTC Bank in respect of the various CCI issued to MTN Nigeria Communications Limited.

This was to give all the parties fair hearing, towards taking an informed decision on the matter.

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BIG STORY

JAPA: UK Net Migration Falls By 20% Amid Visa Restrictions

Published

4 hours ago

November 28, 2024

PorscheClassy News

Net migration to the United Kingdom has dropped significantly, with figures for the year ending June 2024 standing at 728,000, a 20 per cent decline from 906,000 the previous year, according to the Office for National Statistics, on Thursday.

The reduction is largely attributed to changes in visa policies implemented by the UK government earlier in the year.

“Our latest estimates indicate a fall in long-term net migration (the difference between people coming to live in the UK and those leaving to live elsewhere).”

“Our provisional estimates show a 20% reduction between our updated estimate for year ending June 2023 (906,000) and our latest estimate for YE June 2024 (728,000).”

“This fall is driven by a decline in long-term immigration mainly because of declining numbers of dependants arriving on study visas,” the report said.

Restrictions introduced in January 2024 prevented many international students from bringing dependants, resulting in a decrease of 94,000 in study visa applications compared to the previous year.

Similar rules introduced in March also prohibited care workers from bringing family members.

While applications for skilled worker visas increased slightly early in the year, there has been a decline since April 2024, when the government revised the list of eligible jobs for the visa category.

The ONS reported that of the 1.2 million people who migrated to the UK during this period, 86 per cent were non-EU nationals, 10 per cent EU nationals, and 5 per cent British nationals.

Indian nationals formed the largest group of non-EU migrants for both work and study purposes, with 116,000 arriving for work and 127,000 for education.

Dependants accompanying work visa holders totalled 233,000, up from 166,000 the previous year, although recent data indicates this number may now be falling.

Emigration also rose, with 479,000 people leaving the UK by June 2024, compared to 414,000 the previous year. EU nationals made up 44 per cent of those leaving, while 39 per cent were non-EU nationals, and 16 per cent were British citizens.

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BIG STORY

Port Harcourt Refinery: Marketers Threaten Boycott As NNPCL Juggles Petrol Price

Published

8 hours ago

November 28, 2024

PorscheClassy News

Dealers Insist PMS Must Be Cheaper Than Dangote’s.
NNPCL Delays Price Portal Opening, Restricts Product.

Oil marketers have outlined the conditions under which they would consider patronizing the newly rehabilitated Port Harcourt Refinery Company (PHRC) in Rivers State. They stated that the refinery, managed by the Nigerian National Petroleum Company Limited (NNPCL), must offer its refined petroleum products at prices lower than those set by the Dangote Petroleum Refinery.

In response to claims made on Wednesday that its petrol was being sold at approximately N1,045 per litre, the NNPCL clarified that the refinery had not yet released its prices. According to the company, products from the refinery are currently being supplied only to NNPCL-owned stations.

Olufemi Soneye, the spokesperson for NNPCL, explained that the company is still reviewing its pricing structure and has not yet begun bulk sales, as its purchasing portal remains closed.

In related news, it was reported on Wednesday that oil marketers had imported a total of 105.67 million litres of petrol into the country within a span of five days.

Marketers confirmed that NNPC was selling petrol at N1,045/litre, stressing that they may be compelled to opt for petrol importation as a means of meeting local demands.

According to The Punch, a total sum of 78,800 metric tonnes representing 105.67 million litres of petrol was imported into the country in the last five days spanning November 23 and November 28.

On Tuesday, the 60,000-capacity Port-Harcourt refinery resumed operations after years of inactivity, drawing initial praise from Nigerians and industry stakeholders.

The NNPC said the newly rehabilitated complex of the old Port Harcourt refinery, which had been revamped and upgraded with modern equipment, is operating at a refining capacity of 70 per cent of its installed capacity.

NNPC added that diesel and Pour Fuel Oil would be the highest output from the refinery, with a daily capacity of 1.5 million litres and 2.1 million litres, respectively.

This is followed by a daily output of Straight-Run Gasoline (Naphtha) blended into 1.4 million litres of Premium Motor Spirit (petrol), 900,000 litres of kerosene, and low-pour fuel oil of 2.1 million litres.

It was stated that about 200 trucks of petrol would be released into the Nigerian market daily.

However, claims that the national oil firm’s PMS price was higher than that of Dangote triggered diverse reactions from marketers.

The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, told one of our correspondents that though NNPC had yet to release any price for the products from the refurbished Port Harcourt refinery, a high price would discourage marketers.

Dangote currently sells his petrol at N970/litre, while imported petrol is around that price.

Ukadike, however, noted that there was the possibility that the NNPC would review its prices downward when the Port Harcourt refinery comes fully on stream.

He confirmed that the state-owned oil company sells a litre of PMS at N1,040 or N1,045 while the Dangote refinery just reviewed its price from N990 to N970 for marketers buying a minimum of two million litres.

Ukadike did not mince words when he said independent marketers would only buy from the NNPC if its price is cheaper than that of Dangote or vice versa.

“With the Port Harcourt refinery now working, we are anticipating that any moment from now, NNPC will give us its price. Once NNPC releases its price, we will start loading from NNPC. That is subject to if it is cheaper than that of Dangote.

“The last NNPC price was N1,040 and N1,045 per litre. But I know there will be a review of prices because there has been a crash in prices globally. So, we are expecting a review. Once that review is done, I will be able to give you the actual price. I know they are reviewing it. They are on top of the matter,” the IPMAN spokesman said.

The latest development also indicates that oil marketers may commence the importation of fuel if the prices set by both domestic refineries surpass their profit margins, thereby making it more financially viable for them to rely on imported fuel rather than locally produced stock.

The National Public Relations Officer of the Petroleum Products Retail Outlets Owners Association of Nigeria, Dr Joseph Obele, had earlier said NNPC petrol was N75 higher than the N970/litre offered by Dangote refinery.

However, PETROAN’s President, Billy Gillis-Harry, in a statement denied the claim, stressing that no price has been released by the national oil firm.

He explained that members of the association bought PMS based on the old pricing structure and are still waiting for the updated prices.

The statement read, “The National Headquarters of Petroleum Products Retail Outlet Owners Association of Nigeria, PETROAN Abuja would Like to Inform the media and the general public that no new price for PMS has been released by the NNPC port Harcourt refinery.

“Members of PETROAN only bought PMS with the old pricing template awaiting

new prices. We are excited that the production and loading of refined petroleum products have commenced at the Port Harcourt Refinery and we are expectant that soon the price of PMS will be stated by NNPC to the benefit of Nigerians.”

NNPC Reacts

But in a message sent to journalists on Wednesday night, the NNPC spokesperson said the national oil firm had not started selling its products from the Port Harcourt refinery to other oil marketers.

He was reacting to an earlier claim by the Petroleum Products Retail Outlets Owners Association of Nigeria that the newly rehabilitated Port-Harcourt refinery was selling at N1,045/litre to oil marketers.

He noted that only NNPCL retail stations are receiving products from the refinery.

He said, “We have not yet commenced bulk sales, and we have not yet opened the purchase portal as we are still finalizing the necessary processes.”

He further stated its current stock was procured from the Dangote Refinery and includes fees and levies.

“At present, the products we are selling are what we bought from the Dangote Refinery, which includes NMDPRA fees. The product from PH is currently for our retail stores. Our prices are regularly reviewed and adjusted as required.”

PMS Imports

Meanwhile, fresh findings (by The Punch) have revealed that a total sum of 78,800 metric tonnes representing 105.67m litres of petrol have been imported into the country in the last five days spanning November 23 and November 28.

The product was conveyed in four vessels with the latest to be received today (Thursday, November 28, 2024), according to documents obtained from the Nigerian Ports Authority on Wednesday.

An analysis of the document showed that 38,500 metric tonnes of petrol imported on Monday, November 25 berthed at the Lagos Apapa port (Bulk Oil Plant).

Similarly, a Bedford ship conveying 10,000mt of PMS will berth at the Ebughu jetty, Calabar port in Cross Rivers on Thursday, November 28.

Two vessels that arrived on Saturday, November 23 is still waiting to berth. The ships are carrying 30,300mt of fuel.

It also revealed that 11,000 metric tonnes of base oil was imported while the 20bn Dangote refinery received crude oil worth 133,986 metric tonnes on Monday, November 27, 2024.

Last week, oil marketers and the NNPCL had stated plans to stop the import of fuel to focus on off-taking from domestic sources.

This was a fallout from a high-level meeting organised by the NNPC Group CEO Mele Kyari, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority. In attendance were representatives of the Major Oil Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria, and key stakeholders from companies such as 11 Plc, Matrix, and AA Rano, among other stakeholders at the NNPCL towers in Abuja.

The meeting was in growing confidence in Dangote Refinery’s ability to meet the nation’s domestic fuel demand and the need to cut fuel imports.

Credit: The Punch

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BIG STORY

Reps To Probe N8.4tn Allegedly Withheld By NNPCL

Published

9 hours ago

November 28, 2024

PorscheClassy News

On Wednesday, the House of Representatives instructed its Committees on Finance, Petroleum (Upstream and Downstream) to investigate reports from the Revenue Mobilisation Allocation and Fiscal Responsibility Commission “alleging that the NNPC (now Nigerian National Petroleum Company Limited) withheld N8.48tn as claimed subsidies for petrol.”

The House also emphasized that “the investigation will address the NEITI report stating that NNPC (now NNPCL) failed to remit $2bn (N3.6tn) in taxes to the Federal Government.”

The committees were tasked with verifying the total cumulative amount of unremitted revenue (under-recovery) from the sale of petrol by the NNPC between 2020 and 2023.

Meanwhile, the House approved the 2025-2027 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) ahead of President Bola Tinubu’s presentation of the 2025 Appropriation Bill to the National Assembly next week.

The MTEF is a multi-year plan for public expenditure that sets targets for budget spending and fiscal policy, ensuring these goals are met throughout the budget process.

The FSP outlines a country’s fiscal policy and medium-term macro-fiscal framework. It is a critical part of the annual budget process and the Medium-Term Budget Framework.

President Tinubu had transmitted the MTEF/FSP to the National Assembly on Tuesday, November 19, 2024, following the approval of the Federal Executive Council.

The Tinubu administration set the oil benchmark for 2025 at $75 per barrel, with oil production projected at 2.06 million barrels per day. The government also pegged exchange rate parameters at N1,400 per dollar, with a projected Gross Domestic Product growth rate of 6.4% per annum.

During the Committee of Supply meeting to consider the report of the Committees on Finance and National Planning and Economic Development, presiding officer and Deputy Speaker Benjamin Kalu expected the usual “carried” chorus from members when he began the clause-by-clause consideration of the 15 recommendations. However, the Minority Leader of the House, Kingsley Chinda, changed the tone of the discussion.

Oil Benchmark Controversy

Chinda spoke out on the $75 oil benchmark, suggesting that the 2025 figure should reflect the 2024 benchmark, pointing to the higher prices reached in early 2024.

He said, “Because of the importance and sensitivity of MTEF, I will advise that we consider it thoroughly before we pass. This is one of the most important bills this parliament will ever pass. They recommend a $75, $76.2, and $75.3 benchmark per barrel of crude for 2025, 2026, and 2027 respectively.

“We are aware that for 2024, what we recommended was $77.96, which is the current budget. Today, it is about $85 per barrel. That is, in the first quarter of 2024, we achieved $85 and it increased further. If we are recommending $75 for next year, which is one month away, against the $77 we recommended for this year, I will advise that we retain the minimum we adopted for this year.

“Rather than increasing, we are reducing. I am not unaware of the issue of moving to gas-propelled vehicles, leaving fossil fuel. I am aware that the world is moving that way, and reliance on crude may be a bit reduced, but going for $75 might be a bit too low,” he said.

In response, the Chairman of the House Committee on Finance, Abiodun Faleke, defended the $75 per barrel benchmark as “responsible.”

He stated, “Crude oil prices in the international market are not controlled by any country. In 2024, we were fortunate that crises in some oil-producing countries led to higher prices. In 2025, there is likely to be more stability. If you set the benchmark too high, it bloats expectations. Today, the price has crashed to $74. I think our benchmark is reasonable.”

Ibrahim Isiaka, the member representing Ifo/Ewekoro Federal Constituency, Ogun State, supported this view, saying, “If we pass this MTEF today and there is a need for amendment, this House can sit and do the necessary review. There was a time when crude sold for $120 per barrel and a time it sold for $20. Let us see this as a working document subject to review.”

At the conclusion of the debate, the $75 benchmark was adopted.

Oil Production

Another contentious point was the significant increase in domestic crude oil production, projected to rise from 1.78mbdp in 2024 to 2.06mbdp, 2.10mbdp, and 2.35mbdp in 2025, 2026, and 2027, respectively.

Chinda questioned the rationale behind the 2025 projection of 2.06mbpd, saying, “We are making projections for domestic crude oil production from 1.78mbpd in 2024 to 2.06, 2.10, and 2.35mbdp for 2025, 2026, and 2027. If you look particularly at the social media, they will tell you that we are producing about 2mbpd, but the truth is, we are not. Although there is improvement, as of yesterday, the volume was 1.05mbpd.

“These are the things that will help us in proper planning so that the government does not have to always come to the National Assembly for borrowing, which also exposes us further to criticisms by Nigerians.

“We must be critical about how we set our benchmark. Our target has always been to produce 2mbpd. OPEC’s quota for us is 1.8mbpd. Putting this ambitious target of 2.06mbpd and 2.35mbpd, we might not really achieve it. If we don’t achieve it, we know we will be tightening our belts. We are already projecting that we will sell 2.06 million barrels, and if we sell less, we will get less funds. Let us reduce our target rate to 2 million barrels per day, which has always been our target,” Chinda argued.

Faleke defended the recommendation, stating, “As of today, production is close to 2mbpd. It is getting better. Operators of NUPRC gave us the details. If you put a lower projection, you are indirectly telling the operators not to work hard. Let us push them to work harder and get more funding for our country. There was a time during the era of Goodluck Jonathan when we were around 2.5mbpd. Mind you, this 2.06 projection includes all the concentrates. It is not just crude oil alone.”

Regarding the proposed exchange rate of N1,400 to the dollar for the next three years, a lawmaker from Nasarawa State, Gbefwi Gaza, said, “In the past few years, we have seen the volatility in our currency. In this country, virtually everything we do is pegged to the dollar. If we don’t have a very good proposed rate, what that means is that we have to increase our borrowing for any deficit.

“What do we have on the ground to make the naira stronger and make the dollar weaker? Yes, we have the Dangote Refinery, but we are in a phase of energy transition. We are going to the era of using more batteries and fewer fossil fuels; yet, fossil remains our main source of income.”

The House also adopted inflation rate projections of 15.75%, 14.21%, and 10.04% for 2025, 2026, and 2027, respectively.

Additionally, the House agreed that “The 2025 Federal Government of Nigeria budget proposed spending of N47.9tn, of which N34.82tn was retained. New borrowings stood at N9.22tn, made up of both domestic and foreign borrowings.”

Capital expenditure is projected at N16.48tn, with statutory transfers at N4.26tn and sinking funds at N430.27bn.

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