By Akintola Omigbodun (Dr)

The first duty of government with respect to its budgets is to ensure that the anticipated revenues come in. When there is a revenue shortfall as is presently being canvassed, government should look in depth into all its revenue sources. The current focus of government is on the drop in the revenue from crude oil sales. The losses have been stated to be from persons taking substantial quantities of crude oil from the flowlines of the oil producing companies and which quantities of crude oil are not accounted for.

In 1980 or thereabouts, there was the Justice Irikefe Commission of Inquiry which was set up when funds were alleged to be missing from the crude oil sales accounts of the Nigerian National Petroleum Corporation, NNPC. At that time, the late Professor Ayodele Awojobi appeared before the commission and raised the issue that there were no flow meters for measuring the quantities of crude oil at the places where crude oil was pumped into ships carrying crude oil from Nigeria. The commission did not look into this matter because according to it, the commission was looking for missing funds and the issue raised by Professor Awojobi was outside the terms of reference of the commission.

More recently, the Minister of Trade and Investment, Mr. Olusegun Aganga, was reported to have made the same remarks as those made by Professor Awojobi in 1980. I believe that if government takes more interest in crude oil quantities that are being officially pumped but not accounted for we would take more appropriate action about the crude oil quantities removed unofficially from the flowlines of the oil producing companies.

Plans were announced recently for a refinery complex to be built at Olokola Free Trade Zone in Ondo State. The scale of the investment is such that if when the refinery is completed the crude oil flowlines to the refinery were to be disrupted, the losses would be considerable. One expects that the refinery would as part of the implementation of the project make alternative arrangements for the delivery of the crude oil by ships. This is probably one of the reasons for the choice of Olokola Free Trade Zone as the refinery location. In similar fashion, government should develop alternative courses of action that would minimize the impact of diminished revenues on the current and future budgets.

For the current year there should be a reduction in recurrent expenditure especially in what in government parlance is described as running costs. For capital expenditure, government should work out priorities for the projects that should be completed this year and which could be completed this year if appropriately funded. The emphasis should be on getting some of the projects completed this year while the others are completed next year. The Coordinating Minister for the Economy, CME, and Minister of Finance, Dr. Ngozi Okonjo-Iweala was featured in the May/June 2013 issue of MIT Technology Review. It was stated that the CME at work would seek to ferret out embezzlers, reduce government waste and get the economy back on track. The CME should get government capital expenditure from being spread thinly over several projects with none of the projects being completed.

Government should work out new arrangements such that project documentation would adequately cover all that is required to complete a project. The contract documents should include a statement that the costings provided by a contractor include all the work that is required to complete the project. If the contractor finds the designs and work items in the bills inadequate at this stage, the contractor should be obliged to state so and indicate the necessary amendments. Next, projects should be packaged such that the period required for the completion of each package should not exceed two years.

Once a contract is awarded, all the funds required to complete the project should be paid into a project-specific account at the Central Bank of Nigeria, from where payments would be made for work done as and when due. Government should not award a contract if the funds for the completion of the project are not available initially. If the completion period for a project package would be more than two years, funds should be provided initially to cover the first two years and during the second year, funds should be provided that would ensure completion of the project. Saudi Arabia is one place where one would not find uncompleted and or abandoned projects. This is simply because considerable effort is put into planning projects and more significantly all the funds required for a project are provided initially.

CONCLUDED