August 20, 2020

Reps threaten to sanction NAFDAC, NNPC over under remittance to FG

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By Levinus Nwabughiogu

House of Representatives has threatened to invoke the law against some revenue generating agencies which have refused to make proper remittances into the coffers of the federal government.

Specifically, these agencies are the National Agency for Food and Drug Administration and Control, NAFDAC, and the Nigerian National Petroleum Corporation, NNPC.

The House said that there was a huge loss of revenue following the under remittances of the Internally Generated Revenue, IGR by the agencies and directed the Budget Office of the Federation to deduct the balance of such under remittances from the allocation of the affected agencies.

Chairman of the House Committee on Finance, James Faleke, made the observations at the last day of the interactive session with government agencies on the 2021-2023 MTEF/FSP in Abuja.

Faleke said that the government has lost over N7billion from NAFDAC just as he said that the cost of production in NNPC was very high.

He said that it was unconstitutional to spend unbudgeted funds.

He said: “You are talking about user fees and that you use it to travel either local or overseas.

“Don’t you have your overhead budget? Don’t you know that under your activities, you are going to travel and that you will present your overhead budget?

“When you are bringing your budget, you know your activities. Every agency knows their activities and one of your activities is that you need to go and carry out inspection which should have formed part of your overhead expenses and government will release the money to you.

“But the fact that you have a shortfall in releases does not empower you to spend your IGR.

“No agency of government is empowered to do that. Not even the Ministry of Finance or even Mr President. It is clear. The President will tell you to go and do it according to the law.

“It is not right that government is losing about N7 billion to your expenditure. N7 billion which should have come to the system out of which you can then draw.

“Tell Madam that we will not take it. She is there to reform the system and we trust that she will do that. But you cannot spend the IGR the way you like.

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“If you do that, the accounting officer can be prosecuted and we as National Assembly will see to that. In the past few weeks, we have been talking about Chinese loans when the money is there in the system.

“We have the money in Nigeria, but we are not doing the needful. We are not remitting what we are supposed to remit.

“The private sector will not remit the taxes and you, government agencies being paid salaries will not remit. Where will the government get money to fund the capital projects when we have deficit budget every year.

“I don’t think it is fair on the system. An agency came here and said they will generate N100 million but will spend N130 million. How?”

On NNPC, the lawmaker said “The greatest problem that we have is cost of production by NNPC. It is such that an ordinary eye cannot see it.

“I know that we have a lot of issues in the Niger Delta region. Even the ones we are producing or the ones the oil companies are producing are hidden from us. We have written letters.

“The House passed a resolution investigating the $30 billion annual revenue leakages generally and we wrote to NAPIMS and till now, they find it difficult to give us data from 2010 till date. In other countries, they can roll it out with the press a button.

“From the data that has been submitted to us by other agencies, including banks and oil companies, we are able to tell you that there is no proper monitoring of our outflows in the oil industry.

“When we complete that analysis, we will let you see it. Can we come to a level when Nigeria can sit in a room and monitor its oil production?”

In his submission, the Director General, NAFDAC represented by Director, Administration and Human Resources, Joseph Ayorinse Aina said that permission was always sought and obtained from the Budget Office to spend the money generated through its User fee platform.

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Also speaking, the Chief Finance Officer, CFO, NNPC,  Umar Ajiya told the lawmakers that production was affected by the coronavirus (COVID-19) pandemic.

“Our performance over the years is as a result of volume, price and cost. In recent time, we have been working closely with the Revenue Mobilisation, office of the Accountant General of the federation, DPR, Inland Revenue, Nigeria Governors Forum and others almost on a monthly basis.

“The Budget Office is our primary partner in setting up the budget appropriation document. What we have realized over the years is that to the extent that we are OPEC members, our ability to produce and sell is curtailed.

“For example, we almost got to 2.4 million barrel production per day before the OPEC meeting came and cut it down to 1.4 million barrel per day. Similarly, the COVID-19 impact has collapsed the price to below cost of production.

“What this tells us is that as an agency of government responsible for oil and gas production, we have to put a watch on the cost. But the cost is our key focus going forward.

“In 2018, the office of the Accountant General of the Federation charged us as a corporation to return N52 billion as operating surplus to the Consolidated Revenue Fund of the federation and we have agreed on a repayment plan and we have already paid about N25 billion.

“What COVID-19 has taught us is that we should be prudent, conservative and watch our cost and that is really our focus.

“We are the most transparent regime ever. Every month, we publish what we collected and what we remit”, he said.

Speaking on monitoring oil production from a particular spot, the CFO said; “It is possible, but it will cost money. But the best agency to do it is the regulator which in this case is the DPR who are supposed to produce data that will be relied upon.

“We are an operator and we need the regulators to also check us and make sure that we are paying the right loyalty to government.”

Similarly, the Group General Manager, Corporate Planning & Strategy, NNPC, Meyisan Eyesan gave the details of revenue projection in the previous, current and 2021 fiscal years.

“Revenue projections are drawn from revenue from oil and gas sale. What we have presented today showed the revenue reconciled with all the regular parties involved in the FAAC process and the Budget Office is full represented in that process.

“We have all sat together, reconciled these figures and signed these numbers off and there are minutes of these meetings

“2018-N1.249 trillion went to government, 2019 N1.146 trillion. These figures are net of cost recovery. The cost includes physical deduction of JV operations, other government funded projects, the National Domestic Gas Development project, pipeline maintenance among others.

“For 2020, N349 billion has accrued to government as at half year-end and that is reflective of the effect of the pandemic. I am sure that we all recall that the crude price clashed in the international market.

“We are fortunate that the prices have picked up, but we have to take it with a lot of caution because there is speculation that there might be a second wave of the pandemic.

“For 2021, there is a projected revenue of N3.54 trillion, 2022, N4.385 and for 2023 N5.341 and we are projecting a flat crude oil price for the period. I think that is understandable given the precarious situation that we find ourselves in 2020”, Eyasan said.

On his part, the director-general of the Budget Office represented by a technical officer, Samuel Omenka said that the office expected all government agencies to submit their respective budgets through the National Assembly.

“Our expectation at the Budget Office is that all agencies of government should submit their budget to the National Assembly through the Budget Office. In the last few years, we have not been having that.

“That is important for us to know their revenue and expenditure as an agency of government just like others. What we have just done now is the projection that goes into the federations account.

“But in terms of their operation and that of their subsidiaries, we are hoping that they will stick to the rules and submit their budget to the budget office”, Omenka said.

Vanguard News Nigeria.