BY EMMANUEL AZIKEN, POLITICAL EDITOR & AYUBA OLABISI
MR.Elias Mbam a seasoned bureaucrat, is the chair man of the Revenue Mobilisation, Allocation and Fiscal Commission, a body that is charged with the constitutional duties of monitoring accruals and disbursements from the common treasury and prescribing operational indices for sharing national revenue among other herculean duties.

Mbam and his new team were inaugurated last year against the background of intrigues that have challenged the review of the revenue formula that has been operative for more than twenty years.

Against the background of the agitation for a new revenue formula and other seemingly controversial issues of sharing the national cake, including the matter of the Sovereign Wealth Fund an interview with Mr. Mbam became a pursuit. Penultimate Friday, the chairman sat down for an interview with Vanguard during which he espoused official and sometimes, personal opinion on the controversies and intrigues that have followed the sharing of the cake in the country.

Mr Elias Mbam

His responses even to some of the most controversial issues were at all times laced in tact that was undoubtedly reflective of his mastery of statesmanship. Excerpts:

The constitution provides that the revenue formula should be revised at least every five years but we are almost thirteen years into the present democracy and there has been no action. Do you think the present formula is still tenable?

Well right from my inaugural speech, I observed that the review of the revenue allocation formula was quiet overdue. The law says that the revenue formula should be reviewed from time to time to reflect changing realities and if you look between now and the thirteen years you just mentioned, there have been several changes. Changes in population, infrastructure and most of indices used in determining allocation of revenue have been changed and the law provides for us to review the formula when these changes occur to reflect the changing realities. It is quite overdue and that is why the commission made it as a major policy to review the revenue allocation formula and we have started the process.

Sir, you are not the first chairman to have initiated a review, your predecessor initiated at least two reviews but somehow got lost in the process especially in the National of Assembly. There were allegations of fake or adulterated copies of the proposal that were sent to National Assembly. Sir do you think your commission is in the position to guard and guide the process so that it can come to a completion?

That is why we are taking our time to make sure that all the issues that caused the previous failure are addressed. We are carrying out extensive review of the literature, the literature of what has happened right from the time of Richard’s constitution where I would say the first revenue formula came and that review will enable us to identify areas that have made it impossible for us to succeed. We are also carrying out studies on fiscal matters and on similar federations. We are touring other federations and then studying why their own are working and our own not working and we are carrying out extensive consultations.

Specifically, I don’t know if you have gone through the briefs left by your predecessor as to what happened to the proposals they sent to National Assembly which were withdrawn purportedly for a review by the commission?

What happened was that the one they first sent had a provision for first line deductions but subsequently there was a Supreme Court judgment declaring it illegal, any deduction outside the three present beneficiaries. In other words, what they were presenting was basically illegal, so they had to withdraw it to amend that section to conform with the Supreme Court interpretation of the constitution.

There is another one that was submitted in 2004, President Yar’ Adua also submitted another one in 2007 which were all withdrawn; did they come back to the commission?

Well, I don’t know of withdrawing or of any other one. The only one I know was withdrawn officially to make it to conform to the Supreme Court judgment. So the formula is going to reflect the wishes of the people and anybody who has fears that it will favour “A” or “B” should not fear. We are going to involve everybody, we will listen to every Nigerian, we will allow their views to be considered and we will come up with what is most acceptable to the majority of the people of Nigeria.

So when are we going to have this formula?

We expect it would be ready for forwarding Mr. President in the first quarter of 2012.

Any hope for the Governors getting a larger share?

Well I have said it severally that I wouldn’t like anybody to look at the purpose of the review as to increase or decrease any of the tier’s present allocation. The purpose is to look at the responsibilities of each tier of government. There is a process; and the process gets to where it will increase, decrease or retain. So we are going to look at the responsibilities and these are part of the studies. What does the Federal government do? Is what they do equitable to what they receive? What do the state and Local Governments do? Where it is not clear we will advice to clearly demarcate them. For instance if you ask me personally, I don’t see what the Federal Government should be doing about supervising a bore hole for instance. Such responsibilities can go to local or state governments because it will save a lot of costs.

Discharging of responsibilities

The purpose is to ensure that each tier of government has enough funds to discharge her responsibilities.

Sir what is your take on the issue of the Sovereign Wealth Fund?

Well, on the Sovereign Wealth Fund generally I have not heard anybody, individual or group saying that the Sovereign Wealth Fund is bad, not even the Governors. But maybe there are some issues in the process or in the implementation that they are not comfortable with, but my question is where have all these people being since the inception of the idea.

When the bill came to the National Assembly, the commission was invited for an interaction with the members the house and we were briefed by the then Minister of Finance, Dr. Aganga. Before the bill came to the National Assembly it went through the Federal Executive Council, National Economic Council, committee of Attorneys General of all the states of this country and they all passed it before it was sent.

And we made our own input and thereafter there was a public hearing on that Sovereign Wealth Fund bill and I never heard any objection to it. So why are all these objections coming now? However, that notwithstanding, we should sit down and talk. I don’t think it’s something that we say it’s closed.

But as it is now, is it in line with the laws of the land?

It depends on how you are looking at it. It is passed and so it is an act of the National Assembly so in that context it is legal. But in the context of the constitution which says that the beneficiary of the federation account shall be only three, federal, state and local governments. But if the three for instance say, ‘this our money we want to save this’, have they contravened the law?

And the National Economic Council involves all the states and the vice president is the chairman. If the three tiers of government should come together and say this our money should be saved for the rainy day. So as far as I am concerned, they have not contravened. What you could then ask is, do they have that right?

Issues of concern

So, the end point is that we need to sit down and talk, have an open mind on it and discuss. Address issues of concern to each tier and reduce over politicizing the issue.

One of our major problems is over politicizing issues and before you know it, lack of confidence comes in, people will start selling ideas, that the purpose is not what you are saying, that it is because of the other one, and that is politics. So we should not allow our economic fortune to be politicized. We should sit down and talk to ourselves from the technical point of view and drop politics.

What role do you play in the Federation Account Allocation Committee?

The Federation Account Allocation Committee is a committee where all commissioners of finance of every state and FCT, all accountants general of the states and FCT and all agencies of the federation of federal government that either collect money or have to do with the issues of federation account. The commission is a major player in that committee. So we are there based on our statutory responsibility of monitoring, collection and disbursement. At that point it is basically disbusrment. We want to be sure that what is declared by the collecting agencies is what is brought to the Federation Account. Call it the policeman in the committee.

But there is the perception that the Committee is actually infringing on the constitutional function of the commission of allocation of funds?

Ideally we have made that as a presentation to the National Assembly. The last time they invited us, I made it known to them that we are in the best position to manage the funds of the federation by law and by neutrality. We enjoy the confidence of the three tiers more than anybody. We regard the Minister of Finance or the Accountant General’s office as part of a tier and so you will not be surprised if the other tiers feel that there will be no justice, no fairness.

The committee was established by an act anyway.

We are developing our democracy and there are so many things that we will have to develop in that process. We are not in any way perfect but the good thing is that after the meetings (FAAC), the commission chairs a post-mortem committee that reconciles all the books. Even the N450 billion that is mentioned as shortfall was discovered by the commission. So, we are in charge of the reconciliation and within the context that we are operating now, we still try to ensure that what we are supposed to do constitutionally is done no matter the condition we find ourselves.

As the Policeman in the FAAC are you satisfied with the way the committee is presently operated?

No.

What is your dissatisfaction?

One, we have said that the management should be reviewed. The office of the Accountant General of the Federation should be separated so that we will have office of the Accountant General of the Federal Government and then office of the Accountant General of the Federation. The Accountant General of the Federal Government should be coming to FAAC the way the Accountants General of the states are coming, that is one. Secondly, the local government is the third tier so they should be represented during the sharing. There is no representation of local governments because they are subsumed by the sates.

Then, they have a joint state/local government account and it is open to abuse. I am of the view that that should be abolished and what is due to the local government should be paid directly to them and they should account for what they have collected and they should also be represented in the FAAC and that committee should be housed in the Revenue Mobilisation, Allocation and Fiscal Commission because it is the only neutral body that enjoys the confidence of the three tiers of government and is also working for the federation.

This N450 billion shortfall from the NNPC what is going to happen to it?

They have started refunding. They have paid two installments amounting to about N15 billion.

When are they going to finish paying it?

I think it is within 36 months.

Have you put mechanism in place to ensure that such shortfalls do not arise again?

We have made our positions clear but unfortunately right now, we are constrained by the law, we cannot enforce. We don’t have power of enforcement. If you go to court sometimes, they say you are not an interested party.

So, we have told NNPC that they need to open a separate account for oil revenue. In the CBN you can have Federation Account 1, Federation Account2 let one of the Federation Accounts be crude oil payments from NNPC, the other one account for FIRS, the other one account for…. It happens even in private companies so that they don’t pay money for the federation in their operational accounts. We are against putting all their money in that account.

The law says that there should be an account that should be called the Federation Account but inside that account you can have A, B, C, D.

Secondly, in all their operations, we should share information on what is being paid to joint ventures, how much is in the account, how much crude is being sold and things like that. There should be more transparency in information sharing. You will also find that part of the problem of the Federation Account is that NNPC in determining the subsidy does not do enough consultation.

What do you mean?

For instance, if you say what you are providing in the budget for subsidy is Nx, you should have done a study to know that Nx will to a great extent be enough to provide the subsidy required for petrol at the pump.

Reality on the ground

But when you unilaterally put subsidy at Ny and it has no relationship with the reality on the ground. So, I made a submission where I told them that they should involve the commission and do a study that if we are to continue with subsidy we should be able to say, this is what is fair enough for subsidy. Because if for instance you say subsidy requires x and in practice it is x plus so many other things, there will be no fuel. So we need to be more realistic.

The same thing with JV funds. If the JV cash call is not adequate, how will the operators work? These are technical issues that demand some study. We should be able to say this is the quantity of oil we consume in this country, this is the quantity we expect NNPC to refine. What is likely to be the average cost at the international oil market? And then you know the difference if we are to maintain the N65.

Because if you don’t do that and NNPC goes beyond the subsidy it is now illegal because it is above the appropriation which was what was happening.

To what extent is your commission involved in monitoring the inflows into the federation account? Do you have the capacity to verify the amount of crude exported?

That is our challenge. Inability to monitor from the terminals. We are supposed to know what quantity of oil is produced, what quantity is sold and at what price and at what exchange rate? These are issues.

Inspection of facilities

Our vision here is to develop this commission to be able to monitor on time what is happening there electronically. We have carried out inspections of some of these facilities.

Our problem is that we do not have the resources to be physically present in all these locations.

But does the NNPC have a fair knowledge of what is exported?

All I know is that when we went the key that will enable you export anything was held by DPR. Nobody will open it, the oil companies don’t open it. When they want to export the NNPC will come, the oil company will come and everybody will be present they will open it, take the quantity that they are exporting and it will be metered, but we on our side would have liked to be there to even ensure that the meters are working properly.

The oil industry is a very technical industry, if you are not properly funded, if you don’t have enough capacity it will be difficult to discharge your responsibility and that is why we are emphasizing capacity building here, we are emphasizing on proper funding of the commission because we have enormous responsibilities and you cannot discharge your responsibilities with empty hand.