The Federal Government on Tuesday revealed plans to cut the oil price benchmark for the 2020 budget to $20 per barrel.

The development would make it the second time the Federal Government is slashing the oil benchmark ‎for the 2020 budget.

The sharp fall in the price of crude oil had earlier forced the government to slash the benchmark from $57 per barrel to $30.

Minister of Finance, Zainab Ahmed, disclosed the Federal Government’s intention to further slash the benchmark on Tuesday, according to a report by Reuters.

The report said Ahmed spoke during a web conference which focused on the impact of low oil prices on Nigeria’s economy.

“We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel,” the minister said at the conference.

Decline in revenue following the sharp fall in the price of crude oil is already taking a toll on Nigeria’s economy and Ahmed had in March disclosed that the N10.59tn 2020 budget would be slashed by 15 per cent.

The minister, at the web conference, also said Nigeria’s oil and gas projects will be delivered later than originally planned as a result of upstream budget cuts.

The Federal Government is planning to cut oil production to 1.7 million barrels per day from the 2.1 million barrels per day proposed in the 2020 budget.

The planned production cut is to be made in line with an agreement brokered by the Organisation of Petroleum Exporting Countries, of which Nigeria is a member.

Reuters also reported that the web conference deliberated on Nigeria’s debt servicing costs.

Ahmed said Nigeria is in talks with creditors to defer debt service obligations to 2021 and beyond.

Shedding further light on the talks, the minister said, “It is not debt forgiveness, it is just rescheduling of our obligations.”

However, the minister did not identify the concerned lenders the government was discussing the debt service deferment plans with.

The minister explained that the request for deferment of debt service was informed by the fact that Nigeria was spending as much as 58 per cent to 60 per cent of its revenue on debt servicing.

In the same vein, Director General of the Budget Office, Ben Akabueze, said oil revenue is expected to fall by more than 80 per cent as a result of the impact of the COVID -19 pandemic.

Akabueze noted that the Federal Government had revised its projections and is expecting the economy to contract by 3.4 per cent in 2020.

The government had initially projected a 2.9 per cent growth in the year.

The Budget Office director-general further noted that the cost of debt servicing is expected to rise by N200bn in 2020.

Crude oil accounts for as much as 90 per cent of Nigeria’s foreign exchange earnings and more than half of government revenue.