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N’Assembly passes N6.06tn 2016 budget

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  • As SEC, shareholders row over shares manipulations

The Senate and the House of Representatives on Wednesday passed the 2016 budget of N6.060tn at separate sessions held in their respective chambers.

This showed a reduction of about N17bn from the adjusted figure of N6.077tn, which President Muhammadu Buhari presented to the National Assembly.

The 2016 Appropriation Bill passed third reading in both chambers after both houses considered and approved the report on the budget submitted by the Joint Committee on Appropriation.

The Senate President, Bukola Saraki, presided over the session in the Senate, while the Speaker, House of Representatives, Mr. Yakubu Dogara, took care of proceedings at the House.

Despite the instability in the price of crude oil, the National Assembly retained $38 as the benchmark oil price for the budget, with oil going for around $41 per barrel currently.

Crude oil production for the nation was pegged at 2.2 million barrels per day and the exchange rate of N197 to $1 was kept as originally proposed by the President.

Both chambers approved N1.587tn as the capital expenditure portion of the budget as well as recurrent expenditure of N2.646.3tn.

They also approved N351.37bn for statutory transfers, N1.475.3tn for debt servicing, and N2.2tn for fiscal deficit.

At the Red Chamber, the Chairman, Senate Committee on Appropriation, Senator Danjuma Goje, said the N17bn reduction came from the errors and omissions identified in the course of working on the details of the budget, particularly in the area of personnel cost.

“In view of the revenue and general economic challenges confronting the nation, the committee had, in a landmark decision not witnessed since the advent of the present democratic dispensation in 1999, reduced the size of the aggregate expenditure and consequently reduced the total recurrent, deficit and borrowing plans,” Goje said.

He explained that the committee filled some of the gaps but that the serious concerns could still be raised in the course of the year because there were many outstanding cases.

Goje’s submission confirmed exclusive reports by The PUNCH that errors and discrepancies had delayed the report of the budget. The National Assembly had failed twice to keep its promise to produce the report before it finally did on Tuesday.

He recommended that subsequent budgets should be submitted in strict compliance with the provision of the Fiscal Responsibility Act to enable the National Assembly to conduct proper engagement and to conclude the budget process in good time.

“There should be proper engagement in the future between the Budget Office of the Federation and the MDAs on budget contents in order to avoid what appears to be a disconnect between them in the processing of budget proposals,” Goje stated.

At the House, the Chairman, House Committee on Appropriation, Mr. Abdulmumin Jibrin, made a similar presentation to his colleagues, saying that the budget was already harmonised and adopted by the joint committee.

The Deputy Senate President, Ike Ekweremadu, cautioned the appropriation committee, to properly address the reduction exercise it carried out in the recurrent expenditure aspect because the development might prevent some workers from receiving their wages in the year.

“The outstanding cases should be identified, especially on the personnel cost, so that we can take advantage of the budget consideration to address it so that we won’t be blamed for the inability to pay salaries,” Ekweremadu said.

On his part, the Senate Minority Leader, Godswill Akpabio, cautioned the Executive against a repeat of the unfortunate experience in the preparation of the 2016 budget, stressing that a situation whereby Ministries, Departments and Agencies of government were denying their proposals was not good enough for the country.

Saraki commended the committee for doing a good job and urged the Presidency and the Executive to play their part well by ensuring that the fiscal document was passed on time for prompt implementation.

He said, “What is unique about this exercise is that for once there is no bickering over the oil benchmark; rather, we all devoted time and energy to ensure that we have a budget that is implementable.

“The budget reflects efficient and equitable allocation of resources to reduce the challenges that we are all aware of. The budget is now a product of bipartisan engagement, commitment and one that is broadly nationalistic. It gives me great joy to commend and appreciate all the efforts that you have all put in.”

Lawmakers at the House of Representatives revisited the controversial Excess Crude Account, advising the executive to ensure that all oil revenues were paid into the Federation Account.

Jibrin informed members that the Appropriation Bill contained provisions restraining the government from channelling revenues into accounts other than the Federation Account.

Meanwhile, the Minister of Budget and National Planning, Senator Udo Udoma, on Wednesday commended the National Assembly for the passage of the 2016 budget.

Udoma, in a statement issued by his Media Adviser, Mr. James Akpandem, expressed satisfaction that the lawmakers did not increase the fiscal deficit in the budget.

Financial and economic experts, who spoke with one of our correspondents, said the passage of the budget would give clarity to everyone as to the direction the government.

The Managing Director and Chief Executive Officer, Economic Associates, Dr. Ayo Teriba, said the N17bn cut in the budget was insignificant, given that the nation’s economy was valued at N95tn.

Teriba said the budget as announced would provide the Central Bank of Nigeria some fiscal guidance, adding, “Not only the CBN, everybody is clear now about the direction in which the government is going to move.”

On the benchmark oil price, he said, “The $38 in the budget is the year average. As we speak, the year-to-date average for the oil price is about $36. Now that oil price is around $41, if it stays above for as long as it has stayed below, then it will get back to an average of $38m.

The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said with the passage of budget, an uptick in economic activities was expected, all things being equal.

Chukwu stated, “But then, the structural bottlenecks have to be addressed. The issue of foreign exchange constraints that customers are facing; the regulation around the forex management needs to be addressed.”

In the meantime, shareholders yesterday disagreed with the Securities and Exchange Commission (SEC) over the cause of the downward trend in the stock market with attendant negative consequences on the economy.

The stakeholders expressed divergent views even as the House of Representatives Committee on Capital Markets and Institutions, headed by Hon. Tajudeen Yusuf began a two- day public hearing on two motions titled: Downward trend of the Nigerian Stock Exchange and urgent need to address the vexed issue of unclaimed dividends.

The President of the Renaissance Shareholders Association, Ambassador Olufemi Timothy, who fired the first shot at the hearing, said the Nigerian Stock Exchange (NSE) has lost Integrity because of shares manipulation and other illegalities.

He wondered how the shares of dead companies kept rising in the Exchange while that of healthy and vibrant companies were static or degraded.

On the post-2008 downward trend of the stock exchange till date, he said: “We investors ( retail, institutions) have discovered that the NSE has turned into something else, hence the continued downward trend of the market without being able to recover for eight years, since 2008.

“Our stock market from our experience as retail investors for two decades now was that the NSE has been turned into gambling centre (Casino Game Market).

Punch with additional report from Upshot

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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