Falling oil prices: Edo to cut costs

BENIN—Governor Adams Oshiomhole of Edo State has said that his government will cut costs and block leakages as part of measures to survive the expected drop in the revenue accruing to the state from the federation account as a result of the crash in the price of crude oil.

Speaking at the state’s first Executive Council meeting in Year 2015, the governor said 2015 will be very difficult, adding that the government will still sustain the progress made in infrastructural development, noting that it was how the little resources available were managed that mattered and not how much the state earns.

He said: “I know we had to go through a very difficult period last year. There is no question that there is a huge gap between our revenue projections and actual receipts from the federation account arising from alleged oil theft but also a huge gap existed between our projected local revenue and what was actually realised.

“With the sustained general reforms, we have decided that some of the gains of this government will be consolidated. It is very clear that we are going to face very serious challenges this year. As at the time we passed our budget, it was based on about $78 per barrel and the Federal Government which acted later,  had to review its figure downwards twice and at the last count had chosen to adopt $65 per barrel.

“It is not clear whether this unstable market price is going to continue on a downward trend or whether we have seen the worst of it or whether we are likely to experience a marginal increase in price but what is obvious is that this year’s revenue will be far less than expected and for me, it is not to overstress the issue whether the volume of oil theft is avoidable or unavoidable.

“Whether we know the thieves or we do not,  whatever is the case, the receipt from the federation account is likely to suffer a huge fall. There is nothing anyone can do about that. It is beyond our control.”

To survive the tough year, Oshiomhole said: “We are going to renew our commitment to cut costs and block leakages as much as possible and ensure that all taxes that are collected are actually reflected in the revenue of government. We will ensure that all leakages in the tax collection chain are blocked.

“Also, we are going to sustain the progress made in other areas where we have made improvements. So, it’s going to be a tough year, but as they say, tough times don’t last, but tough people do.”