Obasanjo Seeks Special Fund

Source: AllAfrica.com

Niger Delta



President Olusegun Obasanjo has formally sent a request to the Senate for $1.062 billion to finance the Niger Delta Independent Power Project (NIPP) and the two extra days of the March 2006 national census. The President's letter dated August 16, 2006 and addressed to Senate President Ken Nnamani reads: "Following my letters of September 9, 2005 and June 12, 2006 on Power Sector Development and 2006 National Population Census respectively, I hereby present, for formal consideration and passage into law by the Senate, the attached Bill for an Act to provide for the issuing out of the Consolidated Revenue Fund of the Federation, an additional total sum of $1,062,591,071. 85 for the funding of the Power Sector Projects in Nigeria and an additional two days of the National Population Census 2006. "I hope this Bill would receive prompt attention of distinguished members of the Senate."



To address a shortfall in the nation's projected revenue for 2006, the President also forwarded a N600 billion request to the Senate, to be taken from the excess crude proceeds. The President further asked the Senate's permission to draw from a $2.5 billion concessional facility from the Peoples Republic of China to finance major infrastructural projects in the country. The shortfall in the 2006 budget has been attributed to the incessant hiccups experienced in the Niger Delta.



Obasanjo, in a July 13, 2006 letter addressed to the Senate president had said rather than produce 2.5 million barrels upon which the 2006 Appropriation Act was predicated, the nation is producing only 2 million barrels of oil per day. "Distinguished Senate president, you may wish to recall that in crafting Budget 2006, oil production of 2.5 million barrels per day was used at a price of $35 per barrel. "Immediately the budget was passed, the problem in Niger Delta assumed a different dimension resulting in oil production shortfall of about 600 thousand barrel per day. Currently, we are producing about 2 million barrels per day which has significant negative variance on oil revenue. This is, therefore, affecting the full implementation of the federal budget and the states and local government budgets as well. "I, therefore, wish to seek the understanding of the Senate to make up for the shortfall estimated at N600 billion for the federal budget from the excess crude proceeds. Each tier of government will get its proportionate share. This is borne out of my concern to ensure that Budget 2006 is fully implemented at all levels of government."



Meanwhile, the president has asked the Senate to approve Nigeria's request to access a concessional facility of $2.5 billion from China for the purpose of financing critical infrastructural projects in three sectors of the economy. "The proceeds of the proposed facility will be applied as follows: (i) Construction of the first phase of a 2600mw hydro-electric power plant on the Mabilla Plateau ($1 billion); (ii) commencement of construction of the first phase of Standard Guage Railway ($1 billion) and (iii) implementation of Phase Two of the Rural Telephony and NICTIB Projects valued at $.5 billion.



"I want to let you know that we urgently need the Chinese facility. In the first place, much of the infrastructural projects to be financed have high import content and their funding with such cheap facility would obviate the need to draw down on our external reserve, thereby enhancing the stability of the exchange rate of the Naira, among other benefits. "The use of the Chinese facility will also assist us in keeping within the framework of our Policy Support Instrument with the Bretton Woods Institutions as it would relieve part of the burden which the implementation of the projects would have exerted on the Budget. "I will, therefore, be most delighted if the Senate will consider the strategic importance of the projects to be funded with the concessional facility and indicate its understanding accordingly", he said.



The president harped on the long-term benefits of the projects to the nation, adding that, "since the Chinese loan offer is concessional and has a tenor of 10 years, I am convinced that it is appropriate for funding such a vital project." The first phase of the railway project, according to the president, would run from Apapa/Tin Can Island Ports in Lagos to Ibadan, Oyo State while part of the loan would be used to bridge the financing gap in the provision of the National Information and Communication Technology Infrastructure Backbone, which would among others, facilitate the implementation of the nation's e-government programme.