ABUJA — Less than two weeks to the end of the year, Director-General of the Budget Office, Mr. Ben Akabueze, has said that the nation is facing financial challenges, with the Federal Government budgeted Independent Revenue performing at a mere 36 per cent, as of September.
Addressing chief executive officers of Government-Owned Enterprises, GOEs, in Abuja, yesterday, the D-G put revenue not remitted by Federal Government organizations at about N2.81 trillion.
The figure came from a long list of 50 defaulting GOEs with unremitted revenues in the current year, as well as those brought forward from previous years.
Top on the list were Petroleum Products Pricing Regulatory Agency, PPPRA, with N1.343 trillion; Central Bank of Nigeria, CBN, with N801 billion; Nigeria Ports Authority, NPA, with N192. 102 billion; Nigerian Maritime Administration and Safety Agency, NIMASA, N66.081 and Federal Airports Authority of Nigeria, FAAN, N51.991 billion.
Others among the largest debtors were NIPOST, N37.744 billion; Nigeria Communications Commission, NCC, N30.853 billion, National Inland WaterWays Authority, NIWA, N30. 834 billion, National Information Technology Development Agency, NITDA, N30.709 billion and Nigeria Airspace Management Agency, NAMA, N22.799 billion.
Budget 2019 threatened as oil price drops
Meanwhile a new threat to the Federal Government’s budget for 2019 emerged yesterday as crude oil price dropped from $66.00 to $57.00 per barrel in the international market, indicating $3.00 below the $60 benchmark of the 2019 budget.
Specifically, the price of Brent fell by as much as 4 per cent, hitting a low of $57.20 a barrel, in its third straight day of decline, while West Texas Intermediate, the US benchmark, weakened as much as 4.1 per cent to $47.84, the lowest level since September 2017.
Also, the price of Organisation of Petroleum Exporting Countries, OPEC basket of 15 crudes stood at $58.24 a barrel, compared with $59.07 the previous Friday, according to OPEC Secretariat calculations.
Investigations by Vanguard showed that the situation was not anticipated as stakeholders who rose from the recent 5th OPEC and non-OPEC Ministerial Meeting were optimistic that stability would be achieved in the global market.
OPEC stated: “Following deliberations on the immediate oil market prospects and in view of a growing imbalance between global oil supply and demand in 2019, hereby decided to adjust the overall production by 1.2 mb/d, effective as of January 2019 for an initial period of six months.
“The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 mb/d (2.5%), and 0.4 mb/d (2.0%), respectively.”
But the situation was said to be fuelled by weaker oil demand amid over-supply from producing nations, currently not involved in OPEC and Non-OPEC accord.
Nigeria battling revenue challenges
Addressing Chief Executive Officers of GOEs in Abuja, yesterday, Akabueze said the country was battling a shortfall in revenue which is worsened by failure of Federal Government organizations to remit about N2.810 trillion.
Akabueze said: “Nigeria faces significant medium-term fiscal challenges, especially with respect to revenue generation. The FY 2017 and Jan-Sept 2018 budget performance clearly reveal that we have a serious revenue challenge.”
He said that key reforms would be implemented with increased vigour to improve revenue collection and expenditure management.
Introducing the new Revenue Performance and Management Framework to the CEOs, the D-G said that Executive Order 2, 2017 must be strictly adhered to, forthwith.
Concerns about financial performance of GOEs gave rise to Executive Order 2 and the circular ref SGF.50/S.3/C.9/24 recently issued by the Secretary to the Government of the Federation (SGF).
The Executive Order 2 of 2017 mandates Government owned Enterprises (GOEs) to: Submit 3-year Revenue and Expenditure Estimates & Annual Budget Estimates to accompany the FGN Budget proposals to the Federal Ministry of Finance/Budget Office of the Federation for: review, verification and transmission to the National Assembly.
In order to operastionalise EO2 and the framework, the Federal Government would determine the Key Performance Indicators for GOEs and ensure quarterly remittances of Operating Surpluses, the D-G said.
Akabueze blasts GOEs
Akabueze condemned the practice by the GOEs, in which he said the Federal Government had invested over N40 trillion, over the years but failed to provide revenue support for government expenditure.
He said: “Despite huge sums the Federal Government has invested (circa N40 trillion) in these agencies, what is usually remitted to the Treasury in terms of dividend or surplus at the end of each operating year is mostly insignificant.
“The record shows that few of the GOEs declare surpluses. In effect, the Nigerian tax payers/general public have not benefited much from these investments in the agencies.”
“Out of the total projected sum of N847.95 billion Independent Revenues in 2018, only N302.66 billion, representing 36.8% performance, had been achieved by September this year.”
The D-G said that the reform initiatives introduced by the Framework included: Performance Monitoring; Expenditure Controls; Budgeting and Financial Reporting; and Financial Oversight
He added that the framework also provides for instituting corporate governance in each GOE to enhance practices, including performance contracts for Chief Executive Officers (CEOs) and other key Management staff; Set financial indicators and targets for each GOE; Monthly publication of revenue and expenditure performance for all GOEs.
According to him, it also included a quarterly publication of each GOE’s Budget Performance.
According to the DG, annual GOE capital budgets would now be “mainstreamed into the Federal Government’s Capital Budget in order to ensure that they are subjected to the same level of scrutiny, procurement and monitoring processes.”
Besides, Mr. Akabueze said that budget and financial reporting requirements of the enterprises would include mandatory use of the Treasury Single Account, TSA, for all financial transactions; quarterly remittances of interim operating surplus by the GOE to replace the annual remittances while cumulative remittances at the end of the year would be reconciled to amount due after; and a provision that Accounts of GOEs, henceforth , be audited within four months after the end of each financial year.
“The computation of the operating surplus shall be reviewed to allow the deduction from the agency’s revenues of only operational expenses, wholly, reasonably and necessarily incurred in its operations,” he added.
Against the backdrop that some agencies’ 2018 budgets were yet to be approved by the National Assembly, close to the end of the year, the DG said that there would henceforth, be a mandatory submission of annual budget of GOEs for review at the Budget Office of the Federation and to be submitted to the National Assembly by Mr. President along with national budgets.
“Consideration and passage of budgets of GOEs should be scheduled with the rest of the annual national Budget,” he said.
Akabueze said that there would be a institutionalized oversight mechanism through an inter-ministerial team, similar in operation to the Federation Accounts and Allocation Committee, that would periodically review and make public their findings on the operations and financial statements of all GOEs.
GOEs to get revenue depts
He added that Revenue Departments would be established in GOEs to be manned by Professional Treasury Officers from the Office of the Accountant-General of the Federation, OAGF and that appropriate sanctions for utilization of IGR without approval or waiver from the Budget Office, would be meted out on GOEs.
It would also insist on payment of outstanding unremitted surplus to Consolidated Revenue Fund, CRF, as well as, set up a task team from the Budget Office and the Office of the Accountant General of the Federation to monitor revenue accruing to the GOEs.