The Federal Government is fretting over the effect of Coronavirus outbreak on crude oil prices and is contemplating a review of the 2020 budget, which is based on a benchmark of $57 per barrel.
The crude oil price has recently fallen to $53 per barrel, which puts the nation’s revenue at risk.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, who briefed State House correspondents on the outcome of the Federal Executive Council (FEC) meeting in Abuja on Wednesday, said the government will study the situations around Coronavirus outbreak before embarking on any cause of action.
She said if necessary, the executive would work with the National Assembly to revise the budget.
Answering questions on the impact of the coronavirus disease outbreak, she said: “We are concerned because it does have an impact on revenue and at the current crude oil price of $53 per barrel is below the budget benchmark.
“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 revenue is so significantly affected, we will have to do some revisions in the budget by way of budget adjustment.
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“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 the budget through working together with the National Assembly.”
She had earlier revealed that FEC approved her ministry’s joint memo with Ministry of Petroleum Resources for the issuance of a sovereign guarantee to the tune of 85 per cent of the Engineering Procurement and Construction (EPC) contract for the Ajaokuta-Kaduna-Kano gas pipeline project which we call AKK.
She recalled the contract was previously approved by council in 2017 in the sum of $2.89 billion, adding that Wednesday’s memo was to at a revised cost of $2.571 billion equivalent to a 10 per cent discount of the original sum.
She explained: “The previous contract was a contractor financing model. The contract that has been approved today is an EPC lump sum contract with the NNPC required to pay 15 per cent of the contract amount while the 85 per cent will be provided by Cynosure of China in the form of loan facility with a sovereign guarantee.
“This is a facility that has an interest rate of LIBOR plus 3.7 per cent with a 12 year repayment period and three years moratorium period.
“We have done an extensive review of this project and we are satisfied that the cash flows from the Ajaokuta-Kaduna-Kano gas pipeline project is sufficient to pay the facility itself.
“This project is one of the cardinal policies of this administration and it is very strategic to national development. It has a lot of positive impacts that we anticipate would be met. It will spur industrialisation and industrial growth as gas-based industries and power generating companies be the key beneficiaries.
“It will also create employment opportunities, increase government revenue, encourage export and enhance the nation’s foreign reserves by reducing dependencies on import, it will be environmentally friendly as it will eliminate gas flaring.
“It will also improve the health of the communities of the oil-producing areas where gas flaring currently takes place.
“It will also reduce the carbon footprint and comply with the climate control treaties that Nigeria has committed to.”
Also speaking at the briefing, the Minister of Health, Dr Osagie Ehanire, explained why the identity of the index case of Corona Virus in the country cannot be unveiled, saying that it would be against medical ethics to do so without his consent.
An Italian man, who is yet to be publicly identified, tested positive for the virus on arrival in Nigeria on February 26, 2020.
However, speculation had been growing concerning the reason why the Coronavirus patient remained anonymous.
The minister, who was briefing State House correspondents after the Federal Executive Council (FEC) meeting in Abuja in Wednesday, said unlike the index case of Ebola, Patrick Sawyerr, who was known, the Italian could not be exposed because he has not given them permission to do so.
He recalled that Sawyer was identified because he passed on and was no longer around to give his consent.
Wednesday’s FEC also approved a memo for the rehabilitation of Murtala Mohammed Bridge, at Kotonkarfe, in Kogi State.
The Minister of State, Works and Housing, Abubakar Aliyu, said the contract sum is N6.61 billion with a completion period of 24 months.
He explained that the bridge is 1.76km and the scope of work is to rehabilitate the dual carriageways between the bridge embalmment, repairs bridge protection work, repair of bridge furniture works, repairs of asphaltic concrete works, repairs of concrete steelworks on foundation sub-structure of the bridge on the water cleaning and corrosion control.
His Aviation counterpart, Hadi Sirika, briefed on a contract for the procurement of Birds Deterrent System for Kano, Port Harcourt and Enugu airports at the cost of $1.758 million which is equivalent to N538.112 million.
He said the delivery period is three months.
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