1. Oil Production = 2.18 mbpd(million barrel Per Day)
2. Oil Price = $57/b (Per barrel)
3. Exchange Rate = ₦305/s
4. Inflation Rate = 10.81%
5. Nominal Consumption = 122.75 trillion
6. Nominal GDP = 142.96 trillion
7. GDP growth rate = 2.93%
1. Oil production volume: The oil production volume is projected to be average 2.18mbpd for 2020. Although this is lower than the projected oil production volume of 2.3mbpd for 2019, we believe that this is a more realistic projection. For 2021 and 2022, the projections are 2.22mbpd and 2.36mbpd respectively.
The actual daily crude oil production and exports have been below budget projections since 2013, despite installed capacity of up to 2.5mbpd, for a number of reasons. ▪ For 2018, actual production was 1.84mbpd and for the first half of 2019 it was 1.86mbpd (base production).
2. Oil Price: A lower benchmark oil price of $57/b (against $60/b for 2019) is assumed considering the expected oil glut in 2020, as well as the need to cushion against unexpected price shock. There are strong indications of an oversupplied market in 2020. All three of the major forecasters – Organization of the Petroleum Exporting Countries (OPEC), International Energy Association (IEA) and the U.S Energy Information Administration (EIA) generally see non-OPEC production growing by around 2mbpd this year, and by even more next year.
U.S. shale oil accounts for most of the total supply increase, but new projects in Norway, Brazil and Australia will also contribute to the increase in non-OPEC supply. Also, market sentiments do not support an expansion in demand. In fact, the growth in demand for OPEC oil specifically is projected to slow down next year.
3. Exchange Rate (₦305/s): The exchange rate of ₦305 per dollar is still okay considering the official value has continued to be stable around 305/306 naira for the 4 years.
4. Inflation Rate (10.81%): The inflation rate of 10.81 percent looks achievable. In 2019, the country was able to achieve 11.08% and if this can continue, inflation rate of 10.81 percent is achievable.
5. Nominal Consumption = 122.75 trillion:
6. Nominal GDP = 142.96 trillion:
7. Real GDP growth: The real GDP growth projections are rates of 2.93% even though falls short of the ERGP projection, the trajectory remains in the right direction.
2020 Appropriation Bill
Budget 2020: Budget of Sustaining Growth and Job Creation
Nigeria's President, Muhammadu Buhari presented the 2020 Budget on 8 October 2019, to the Joint Session of the National Assembly.
Highlights of the budget
1. Non-debt recurrent expenditure includes N3.6 trillion for personnel and pension costs, an increase of N620.28 billion over 2019 for new minimum wage and proposals to improve remuneration and welfare of Police and Armed Forces.
2. Increase of VAT rate from 5% to 7.5%.
3. VAT registration threshold of N25 million annual turnover.
4. Innovative borrowings using instruments such as Sukuk, Green Bonds and Diaspora Bonds
5. Implement a single customs window, speeding up vessel and cargo handling and issuing more licenses to build modern terminals in existing ports, especially outside Lagos.
6. Plan to present two Petroleum Industry Executive Bills to the National Assembly
7. Re-present the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2018 not passed by the 8th National Assembly
8. Key capital spending allocations include Works & Housing N262b; Power N127b; Transportation N123b; Universal Basic Education: N112b; Defence N100b; Education N48b; and Health N46b.
Key Assumptions of the 2020 Budgets
1. Oil Production = 2.18 mbpd(million barrel Per Day)
2. Oil Price = $57/b (Per barrel)
3. Exchange Rate = ₦305/s
4. Inflation Rate = 10.81%
5. Nominal Consumption = 122.75 trillion
6. Nominal GDP = 142.96 trillion
7. GDP growth rate = 2.93%
1. Oil production volume: The oil production volume is projected to be average 2.18mbpd for 2020. Although this is lower than the projected oil production volume of 2.3mbpd for 2019, we believe that this is a more realistic projection. For 2021 and 2022, the projections are 2.22mbpd and 2.36mbpd respectively.
The actual daily crude oil production and exports have been below budget projections since 2013, despite installed capacity of up to 2.5mbpd, for a number of reasons. ▪ For 2018, actual production was 1.84mbpd and for the first half of 2019 it was 1.86mbpd (base production).
2. Oil Price: A lower benchmark oil price of $57/b (against $60/b for 2019) is assumed considering the expected oil glut in 2020, as well as the need to cushion against unexpected price shock. There are strong indications of an oversupplied market in 2020. All three of the major forecasters – Organization of the Petroleum Exporting Countries (OPEC), International Energy Association (IEA) and the U.S Energy Information Administration (EIA) generally see non-OPEC production growing by around 2mbpd this year, and by even more next year.
U.S. shale oil accounts for most of the total supply increase, but new projects in Norway, Brazil and Australia will also contribute to the increase in non-OPEC supply. Also, market sentiments do not support an expansion in demand. In fact, the growth in demand for OPEC oil specifically is projected to slow down next year.
3. Exchange Rate (₦305/s): The exchange rate of ₦305 per dollar is still okay considering the official value has continued to be stable around 305/306 naira for the 4 years.
4. Inflation Rate (10.81%): The inflation rate of 10.81 percent looks achievable. In 2019, the country was able to achieve 11.08% and if this can continue, inflation rate of 10.81 percent is achievable.
5. Nominal Consumption = 122.75 trillion:
6. Nominal GDP = 142.96 trillion:
7. Real GDP growth: The real GDP growth projections are rates of 2.93% even though falls short of the ERGP projection, the trajectory remains in the right direction.
2020 Appropriation Bill
Budget 2020: Budget of Sustaining Growth and Job Creation
Nigeria's President, Muhammadu Buhari presented the 2020 Budget on 8 October 2019, to the Joint Session of the National Assembly.
Highlights of the budget
1. Non-debt recurrent expenditure includes N3.6 trillion for personnel and pension costs, an increase of N620.28 billion over 2019 for new minimum wage and proposals to improve remuneration and welfare of Police and Armed Forces.
2. Increase of VAT rate from 5% to 7.5%.
3. VAT registration threshold of N25 million annual turnover.
4. Innovative borrowings using instruments such as Sukuk, Green Bonds and Diaspora Bonds
5. Implement a single customs window, speeding up vessel and cargo handling and issuing more licenses to build modern terminals in existing ports, especially outside Lagos.
6. Plan to present two Petroleum Industry Executive Bills to the National Assembly
7. Re-present the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2018 not passed by the 8th National Assembly
8. Key capital spending allocations include Works & Housing N262b; Power N127b; Transportation N123b; Universal Basic Education: N112b; Defence N100b; Education N48b; and Health N46b.