Business

November 27, 2022

How N424bn error in 2023 budget escaped detection across ministries – Finance Ministry

Zainab Ahmed

 
 By Emeka Anaeto, Business Editor

The Federal Ministry of Finance, Budget and National Planning has indicated that the N424 billion allegedly inserted into the 2023 budgets of the Ministry of Humanitarian Affairs, Disaster Management and Social Development as well as that of the Ministry of Defence and Ministry of Power were tabulation errors.

The ministry, however, stated that the figures were correct and duly approved by all the relevant authorities.

A statement signed by Yunusa Tanko Abdullahi, Special Adviser, Media and Communications, to the Minister of Finance, Budget & National Planning, also indicated that opportunities to spot the error and correct it were available but not utilized by all the ministries and authorities involved.

Read Also: N206bn Budget Padding: Farouq writes Finance Minister, demands explanation

The ministry of finance was responding to allegations over alleged budget padding insinuating that the Finance Ministry inserted the amounts in the budgets of Ministries of Humanitarian Affairs and that of Defence, with the Minister of Humanitarian Affairs Sadiya Umar Farouq telling the National Assembly last week that she didn’t know how the figures entered her ministry’s budget, a statement that raised alert amongst the legislators.

Responding to the insinuations in a statement titled, ‘‘Where The Allegation Goes Wrong In Project NSSNP-SU Budget’’, Abdullahi stated:  ‘‘The story in a national daily alleging budget padding entitled ‘Finance Ministry on the spot over N424bn ‘padding’ is fabricated and misleading, because the said insertions allocated to the said items and sources in the budget proposal is also unfounded.

‘‘The project so referred is domiciled in the Ministry of Humanitarian Affairs, Disaster Management and Social Development headquarters.

‘‘The World Bank is the funding source for the National Social Safety Net-Scale Up project to the tune of $473,500,000 which is equivalent to N206,242,395,000, using the N435.57/USD exchange rate.

‘‘The project was correctly described in the submission from International Economic Relations Department (IERD) for the 2023 budget.

‘‘But, unfortunately, a wrong code was selected from the drop down menu which resulted in a wrong description of the project which resulted in it being captured as ‘Purchase of
Security Equipment’ in the Government Integrated Financial Management Information (GIFMIS) Budget Preparation System (BPS).

“Please, note that the BPS has a limited range of encoded programme/project descriptions.

“Also note that the multilateral loans are usually project’s tied, and have specific codes in the budget system. The multilateral loans are different from the envelopes usually given to ministries, department and agencies (MDAs).

‘‘The funds are drawn by the beneficiary Ministries under the terms of the agreements, and the financial institutions disburse directly to service providers.

‘‘There were ample opportunities to review details for observations by Ministries and corrections made by the Budget Office of the Federation (BOF).

‘‘The proposed 2023 budget for each Ministry was circulated for review and feedback, then Federal Executive Council (FEC) reviewed it before it was submitted to NASS by President Muhammadu Buhari.”

Further stressing the integrity of the budgetry system, Abdullahi said, ‘‘This administration has undeniably been highly committed to budget transparency, having undertaken various reforms in the public finance management space which have culminated in the significant recorded improvements.

The billions

“The amount of N206,242,395,000 is correct. The error in description is regretted, and will be corrected through the Appropriations Committee.”

On the same problem involving the Defence Ministry, the statement said, ‘‘The Honourable Minister of Defence wrote to Mr. President requesting the approval and release of $1,363,880.40 and N158,928,045.37 for the implementation of Phase 1 of the project.

‘‘He also requested that the sums of $12,274,923.60 and N11,946,311,375.18 will be required to implement Phases 2 and 3 of the project, which Mr. President graciously approved. 50% of the requirement for Phases 2 & 3 (using the exchange rate of N435.57/USD), amounting to N8,600,000,000, has been included in the 2023 budget proposal of the MoD. Project: Safe School Initiative (SSI) – N2,250,000,000.

“The Defence Headquarters submitted its uncosted requirements under this programme. The SSI Secretariat, Federal Ministry of Finance, Budget & National Planning (FMFBNP), however, submitted a request of N4.5bn for MoD, of which only N2.250bn was provided in the 2023 budget.”

Explaining the involvement of the Ministry of Power, the statement said, ‘‘The Federal Ministry of Power (FMoP)
The submission for the 2023 Multilateral/Bilateral Tied-Loan project for FMoP is a total of N195,465,151,790.65 with a breakdown as follows: The Zungeru Hydro- Electric Power Project is funded by Export-Import Bank of China. Amount: USD175,757,149.92, which is N76,554,541,790.65.

‘‘The Power Sector Recovery Operation (PSRO) is funded by World Bank. Amount: USD162,000,000, which is N70,562,340,000.00.

‘‘The Nigeria Electrification Project (NEP), to be executed by the Rural Electrification Agency (REA), is funded by World Bank and AfDB. Amount: USD55,000,000, which is N23,956,350,000.00.

The Nigeria Electricity Transmission, to be executed by Transmission Company of Nigeria (TCN)), is funded by the World Bank. Amount: USD56,000,000, which is N24,391,920,000.000.

“The total of the fund for the four projects is USD448,757,149, which is N195, 465,151,790.”