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Where Is Our Money?

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By Les Leba

In a recent media interaction, Governor Emmanuel Uduaghan of Delta State expressed deep concern at the inability of the NNPC to fund the federation account and facilitate payment of monthly allocations to the three tiers of government, especially when crude oil has consistently sold for over $100/barrel in place of the budget benchmark of $79/barrel!

Furthermore, Uduaghan noted that the earlier reported production loss of about 400,000b/day, due to theft and leakages, has since been reduced to less than 100,000b/day, after repairs to some vandalized pipelines! “So, where is the money?” the Governor asked in apparent consternation!

However, Tumini Green, NNPC’s General Manager for Public Affairs, responded in a media statement that the NNPC does not owe the federation account after “outstanding subsidy and other associated cost of operation and losses are captured”; nevertheless, she admitted that “Not all revenue collected by NNPC are paid directly into the account for federal allocations with the CBN”.

Notwithstanding, 11 state Governors under the platform of Progressive Governors Forum have dismissed the NNPC’s defence as “escapist, dishonest and contradictory”. The governors therefore, demanded for a statement on total receipts from sale of crude oil.

The Governor of Edo State, Adams Oshiomhole also corroborated the concerns of his colleagues and therefore implored the corporation to pay over N2.3tn it allegedly owed, into the federation account.

According to Oshiomhole, “The truth is that there is financial crisis in Nigeria, which has very serious national security implications ….” In Edo State, like the rest of other 36 states, part of our July allocation has not been paid, about one-third of our August allocations has not been paid, and nothing has been paid for September allocation, and it is the first time since 1999 that this has happened.”

However, in a report in ThisDay’s edition of 6th October (page 11), the Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, confirmed that the full balance of N121.1bn for July allocation had finally been fully distributed among the tiers of government; the Minister also noted that “it had taken the Allocations Committee two months to fund July revenue shortfall. It is undoubtedly, paradoxical, that such critical fund shortage existed side by side with the burden of systemic surplus funds, which CBN compulsively sought to reduce and thereby forestall inflation, by keeping idle, hundreds of billions of naira, which it borrowed at double-digit interest rates from the banks, with sales of treasury bills! It is equally ironical that these perceived ‘oppressive’ surplus funds also existed simultaneously with the readily acknowledged shortage of cheap loanable funds to the real sector!!

Furthermore, it is also inexplicable that despite the resultant socioeconomic hardship caused by late payment of salaries and contractors’ bills, and threat to the implementation of the 2013 budget, the Finance Minister still sequestered and kept idle, over $3bn in an excess crude account with little or no yield, while CBN also sustained its questionable borrowing spree!

Indeed, both Oshiomhole and Uduaghan seem to believe that NNPC has shortchanged the federation account, as they argue that so long as crude output remained above 80% of budget benchmark, and price remained consistently above $100/barrel; (i.e. over 25% of projected budget benchmark of $79/barrel), the output deficit should be more than compensated for, by the handsome price surplus!

In her defence, Tumini Green insists that after its cost of operations and the fuel subsidy refunds internally absorbed are captured in its statements, NNPC does not owe the federation account any outstanding amount! Nonetheless, the Governors queried the legality of NNPC settling its subsidy refunds internally before remitting any surplus to the federation account!

In reality, private sector oil marketers may have claimed over N800bn in subsidies for their supply of about 30 to 40% of total fuel imports this year; conversely, however, there is no substantive statement of subsidy payments to NNPC for the corporations’ supply of over 60% of domestic fuel requirements!

Consequently, NNPC could attribute a large percentage of the alleged payments shortfall of N2.3tn to subsidy claims, internally directly accommodated in 2013 and previous years! Nonetheless, according to Oshiomhole, even if this is so, NNPC still has a duty to explain the “arithmetic” for its 455,000 barrels per day allocation for refining locally; Oshiomhole observes that “Since the NNPC barely refines 100,000 barrels per day; the question, therefore, is what happens to the balance of 355,000 barrels per day?” Since the Accountant General, the Auditor General, the Finance Minister and the CBN have all remained reticent on this matter, only a comprehensive forensic audit will answer this question. Nonetheless, what is clear is that in place of about N1tn budgeted this year, consolidated fuel subsidy payments to NNPC and other marketers may well exceed N2tn (i.e. about 40% of 2013 budget)!!

Another critical issue is whether or not constitutional provisions exist to support NNPC’s style of funding the federation account. The Governor’s forum insists that Section 162(1) of the 1999 Constitution clearly specifies that, with the exception of the proceeds of National Income Tax of members of the security forces, “The federation shall maintain a special account to be called the federation account, into which shall be paid all revenue collected by the government of the federation.”

Consequently, the Governors, therefore, insist that if any other Act or Bye Law empowers NNPC to do otherwise, such Act would be contradictory, and that other law will remain null and void.

Ironically, in spite of the clear provisions of Section 162, the Governors’ Forum has however, refused to acknowledge the reality of CBN’s blatant contravention of the same Section 162(1) with the apex bank’s unilateral substitution of naira for the federation’s dollar revenue; certainly Section 162(1) does not confer such powers on the CBN, neither does it recognise the CBN’s fraudulent accumulation of over $40bn self styled own reserves, existing outside the consolidated federation account! The Governors, however, probably do not care because this illegal monetary framework liberally funds their own fiscal impunity!

SAVE THE NAIRA, SAVE NIGERIANS!!

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