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Tag: FAAC

  • FAAC: The road not taken

    FAAC: The road not taken

    To state that the 36 states in the federation plus Abuja have fallen on bad times in the last one year is to state the obvious. The truth is that most, perhaps with one or two exceptions, are already tottering precariously towards insolvency – the result of the industrial scale theft said to have taken out nearly one-fifth of the domestic output of the nation’s crude. All across the 36 states capitals, the story of massive cutback in capital spend has since become the rule rather than exception. With shrunk monthly allocations, most states have barely enough to take care of recurrent expenditures let alone take on development projects. And with paltry Internally Generated Revenues, many have had to resort to borrowing to augment their finances. In the circumstance, it should be easy to understand the renewed clamour by states under the aegis of the Federation Accounts Allocation Committee (FAAC) to hive off petrol subsidy; it smacks of attempt to shore up the distributive pool and hence boost their share.

    Now, this is something that would have been unthinkable a few months ago. Indeed, the nationwide protests which greeted the January 2012 attempt would have rendered such contemplations a death wish. That the nation is back – or nearly so – where it left off in 2012 is a measure of how much the issue will simply not go away.

    To be sure, we have heard of the denial by President Jonathan during his last media chat that any such plan to hike petrol price was in the offing. However, I don’t think Nigerians can be fooled by such tepid assurances in the background of the rather insistent and strident pressure by the commissioners on the federal government to take the issue on. Moreover, it is hard to miss the import of recent findings by the controversial pollster – NOI polls – which suggest that more than 90 percent Nigerians are already buying their fuel above the official prices. Nigerians understand the game well enough to appreciate the theme as part of an elaborate, choreographed plot by the Jonathan administration to force the bitter pill.

    Of course, knowing how emotive Nigerians are when it comes to any discussions on the subject, one can only infer that the reason citizens have not bothered to denounce the still unfolding “satanic agenda” is because they have more serious issues to worry about in Boko Haram at the moment! Even at that, I do not see them yielding any grounds now or in the near future in any further discussions on the issue given the apparent lack of sincerity and bad faith on the part of government since that last time out in 2012. The indications are that the citizens would in fact be more resolute next time around.

    And why not?

    The reason(s) is at the heart of the story underlying the clamour which seeks to draw more of our blood. The single official line of course is that the FAAC hasn’t enough to share. In other words, the nation could not meet up the daily crude production target of 2.5 million barrels per day as set out in the 2013 budget. We have been told that for nearly the whole of that year, Nigerian National Petroleum Corporation (NNPC) and its principal, the federal government, could only deliver, on average, four-fifths of the projected budget output. And that the situation seems unlikely to change in the current fiscal year. In other words, our federal government, under President Goodluck Jonathan, is unable to tame the black market economy of oil theft.

    You think it’s hard to imagine the scale of industrial theft and associated production shut-ins in which a nation would be bled by nearly 400,000 barrels of daily crude output? You guessed right: Only in Jonathan’s impunity republic would such quantum of losses be conceivable. Like their Boko Haram counterparts, the oil-thieves are evidently ghosts!

    But then, think about the fact that no hard questions are asked nor explanations given as to how the army and navy would sit idly by while watching the nation loose a fifth of its projected earnings. And now imagine that state governments, co-beneficiaries from the federation account that couldn’t take the lead to demand that the federal government rise up to its responsibility and NNPC to give proper renditions of its accounts beyond the monthly show of walkouts to protest revenue shortfalls now assuming the leadership of the remove-the-subsidy orchestra! We are talking of an industry in which the overseeing minister is on record to have shelled out N10 billion for the love of the luxury toys.

    By the way, what does our body of finance commissioners know about the nation’s transparently opaque oil industry? How much of its rentier value chain that feeds fat on the citizens’ misery do they know? What do they know of the bungling Department of Petroleum Resources (DPR), the so-called oil industry police that looks on while all manners of economic saboteurs carry on with their rape and plunder? How much of the activities of the department do they know? Or their kith, the club of fuel importers and their allies in the bureaucracy who between them are known to have fleeced the treasury of trillions of naira in illicit earnings in the last few years?

    And then you ask: of what value is the monthly conclave FAAC beyond the monthly ritual of sharing unearned money?

    I haven’t exactly said that the states could not do with more money. As a matter of fact, they do. I would even go as far as to argue that they deserve far more than the paltry 24 percent they are getting under the existing revenue sharing formula. Even here, my understanding is that states are not even seriously considering pushing this route. Or even the more enduring route of tapping into their latent potentials, preferring, as it were, the usual route of easy money without breaking a sweat. This is where the problem lies.

    For the purposes of clarity, I need to make the point: the case for the states needing more money can also be made for the need to enhance citizens’ disposable incomes. Whereas the states need funds to execute their programmes, the larger economy needs citizens’ enhanced disposable incomes to run. It is called cash at hand –economists call it effective demand. As it is, the Nigerian citizen is overburdened enough with governmental inefficiencies without the need for the cyclic rod of affliction.

    Does that amount to a foreclosure on the subsidy debate? Far from it. Yours truly has never denied that the argument for the subsidy removal is anything but compelling. It is a matter of cold, rational economics. The point of departure is whether to treat the subsidy as cause or effect. For me, only when citizens and the government come to a common understanding on this point can we begin to make headway. For now, the states will do well to consider thinking out of the box to boost their revenues. It is the smart thing to do.

  • States ratify oil subsidy removal – FAAC

    States ratify oil subsidy removal – FAAC

    The Federation Account Allocation Committee (FAAC) in Abuja on Tuesday took a decision to remove petroleum subsidy in the country.

    The Chairman of Finance Commissioners Forum, Mr. Timothy Odah, said this when he briefed journalists on the outcome of the FAAC meeting for the month of March in Abuja.

    Odah said at their last meeting, a committee consisting of six Accountants-General of states and six state Commissioners for Finance was set up to conduct investigations and present a report on the impact of the subsidy in the country so far.

    “FAAC in its plenary session finally took a decision that petroleum subsidy should be entirely removed.

    “Because from what was discovered, the subsidy is more or less a solution worse than the problem it is meant to solve.

    “Therefore, we are of the firm decision that it will be better for states to access their funds and grant subsidy in their respective capacity.

    “Our position will be submitted to the Presidency,’’ the News Agency of Nigeria quoted the commissioner as saying to journalists.

    Odah cautioned organised labour to be careful in its refusal to rally for the removal of the oil subsidy programme.

    He alleged that most of them were against the removal because they were on the payroll of oil marketers in the country.

    The Accountant-General of the Federation (AGF), Mr. Jonah Otunla, said N641.4 billion was shared among the Federal Government, states and local governments as revenue for the month of March.

    “The distributable statutory revenue for the month is N534.91billion, which is more than the N531.33 billion that was shared in February.

    “Also distributed is the sum of N7.62 billion refunded by the Nigerian National Petroleum Corporation to be shared to states and local governments.

    “In addition, the sum of N35.55 billion is proposed for distribution under the SURE-P programme.

    “So, the total revenue distributable for the current month, including Value Added Tax (VAT) of N63.31 billion is N641.38 billion,’’ he said.

     

  • ‘No alternative to oil subsidy removal’

    ‘No alternative to oil subsidy removal’

    The call for the removal of subsidy on Premium Motor Spirit (PMS) is growing louder with the states insisting that there is no alternative to its removal.

    Chairman, Finance Commissioners Forum, Timothy Odaah was optimistic that President Goodluck Jonathan would approve the recommendation to remove subsidy when their letter is submitted to him after next month’s Federation Account Allocation Committee (FAAC) meeting.

    Odaah insisted that there is “no alternative to subsidy removal,” stressing that its removal would ensure that “states develop at paces commensurate with their strength. If subsidy is removed, it will help states create better jobs.”

    He expressed displeasure at the current job creation efforts of some state governments that engage university graduates to cut grass by the road side and trim trees.

    He said: “What we are advocating is that the subsidy should be removed so that every state or any member of the federating unit sharing from FAAC will take its own money then decide to use it or grant subsidy in a level that it will be able to afford.

    “The states will grow their own industries, there will be much more employment.  A situation where subsidy alone takes away much of what could be used for the purpose of industrialisation is not acceptable; there will be investment; there will be employment and in that respect, you will discover that the vicious cycle of poverty will be eliminated.”

    He described SURE-P job creation as retrogressive, lamenting that Nigeria ought have grown beyond the use tricycles (Keke NAPEP) as a means of transportation.

    Though Odaah did not say that all state governments were in support of the planned removal of subsidy, he said governors were responsible people who listen to the voices of their people and will act in the overall best interest of their people many of whom he said are now in favour of the removal of subsidy.

    “The voice of the people is the voice of God, every responsible government does what is good for its people. It is what the people say that they will do.

    “The intended benefit of SURE-P is not getting to the poor people. It is not helping the average poor man in Nigeria. It’s been diverted by organised few and all the members except the leaders of labour unions were deceived into going against the removal of subsidy in 2012,” he said.

     

     

  • Finance commissioners call for subsidy removal

    Finance commissioners call for subsidy removal

    AFTER a long while, the fuel subsidy debate is set to reopen.

    Members of the Federation Account Allocation Committee (FAAC) are agitating for the removal of subsidy on Premium Motor Spirit (PMS) or petrol.

    The government believes such a step will free funds for infrastructural development but critics say it will enrich a few and deepen the common man’s pains.

    Speaking yesterday at the end of this month’s FAAC meeting in Abuja, the chairman of finance commissioners, Mr. Timothy Odaah, said they were advocating that “the subsidy should be removed so that every state or any member of the federating unit sharing from FAAC will take its own money and determine how to use it or grant subsidy to the level that it can afford.”

    “Subsidy is not solving the problem which it is meant to solve,” Odaah said.

    He noted that the “Nigerian Labour Congress (NLC) and majority of the Nigerian populace appear to have been deceived into clamouring for subsidy because of syndicated projects and programmes that were put in, especially with regards to easing transportation problem and likewise tariffs on power supply, but you will discover that its the average poor man that suffers.”

    For example, Odaah said, most transporters are not applying any benefit of subsidy in what they charge “because we know of course that the Federal Government has a good intention to subsidize transportation so that it will be to the absolute benefit of every Nigerian, but there is no reflection of that subsidy benefit. Besides, its like a system that robs Peter to pay Paul by making the rich to grow richer and the poor to go poorer.”

    Odaah said: “A committee for subsidy has been constituted and it is to look into the impact of subsidy, whether it should actually be allowed, but I want to tell you that the resolution we took is that subsidy should be removed.”

    The committee, he said, “will formulate a letter that will be sent to the Nigerian Goverors Forum and we are going to brief our respective governors and we will inform the President. We know it will be very difficult, considering the critical period we are in.”

    To back the claim for the removal of subsidy, Odaah said “there are some states that are fully industrialised and you have many industries and you use this subsidy in that particular place and the people who benefit more are those from the states that are industrialised because the fuel consumption of those industries which use more of the fuel subsidy, unlike the states that are under industrialised.”

    With regards to marketers of petroleum products, the chairman of Finance Commissioners Forum said “marketers are not following the intention of the government because it has created a very big market for them in certain ways. This is because transparency is not coming up. There are some people that are eating from the subsidy to the disadvantage of others,” he said.

    It is because of that, he said “the resolution at FAAC, and that has been the position of the Finance Commissioners, is that the call should be made to the President so that he will have to review and reconsider the position of this subsidy and remove it”.

    To prevent a backlash, Odaah advocated the “sensitisation of the average public in Nigeria and the labour leaders to understand that we were deceived because it is not really serving the purpose because many states are crumbling as subsidy payment has eaten so much into the crude reserves.”

    The Excess Crude Account (ECA) has $3.5 billion because $1 billion was transferred and, according to Odaah, “it is because certain approaches were followed, otherwise, by the month of April, you will be discovering a situation where the states’ allocation will have to be deducted to pay subsidy and where is this subsidy going into?”

    However, “you will be better employed in the states, the states will grow their own industry; there will be more employment compared to the situation where subsidy takes away much that could be used for the purpose of industrialisation there will be no employment, no investment and the vicious cycle of poverty will continue,” he said.

    Odaah speaking on behalf of commissioners of Finance, took a swipe at the policy on Cash Reserve Ratio (CRR) of the Central Bank of Nigeria (CBN). He expressed concern that “75 per cent of public sector deposits are taken to the Central Bank. This is a deliberate attempt to create artificial scarcity of funds. Then, states, local government and even the Federal Government cannot borrow because the interest rate has gone so high and there is the plan by the CBN to increase it to 100 per cent if that is done it is an absolute artificial scarcity of funds created by a manipulated means.”

    FAAC members, he said, “are calling on the Federal Government to look at it and review it by bringing it down so that cash would be available because cost of funds is growing too high and with that states cannot meet up. You go to borrow from international organizations, it is not possible, you want to borrow within Nigeria, it is not possible, because even the facilities you accessed previously at 12 per cent, the banks are now raising it to 25-28 per cent and by the time they push the CRR to 100 per cent it would even become 50 per cent. So, who is it serving. We see it as a solution that is serving only to confuse that is one of the issues we took into consideration.”

    It was reiterated at the meeting that the Petroleum Products Pricing and Regulatory Agency (PPPRA) should be co-opted into the membership of FAAC. According to Odaah, “there is no reason why it should stay away from FAAC meeting and we have demanded that they should be represented here.”

    Total allocations to the three tiers of government for February was N641.299 billion made up of N531.332 billion as statutory allocations to the Federal Government (52.68 per cent or N247.533 billion); states (26.72 per cent or N125.552 billion); local governments (20.60 per cent or 96.795 billion) and derivation (13 per cent to oil producing states).

    Also for February, N66.801 billion was shared by the three tiers of government from Value Added Tax (VAT) proceeds, N35.549 billion from SURE-P and N7.617 billion refunded by the Nigeria National Petroleum Corporation (NNPC).

  • Excess Crude Account down as oil price goes up

    Excess Crude Account down as oil price goes up

    The Excess Crude Account (ECA) ought to get fatter as oil price goes up or stabilises, but despite oil price increase, which jumped to $109 yesterday, the account has kept dwindling. Many are asking what the problem is, write CHIKODI OKEREOCHA and EMEKA UGWUANYI

    Oil price rose yesterday over severe winter, weak dollar and production disruptions in Libya and Angola. Brent crude oil rose five cents to 109.13 dollars a barrel. If the severe winter continues across North America, the rise in price will also continue and speculators and hedge funds have sharply increased bullish bets on crude oil to near their highest ever.

    “The U.S. winter and weak dollar are both supporting the oil market,” said Carsten Fritsch, senior analyst at Commerzbank. But there is a chance of a sharp correction. The risk is limited as long as the U.S. weather stays cold. But when it gets warmer, prices could come down, Fritsch said.

    Brent price in January was between $107 and $107.5 per barrel while the entry price into February was $105.4.

    At the Organisation of Petroleum Exporting Countries (OPEC), of which Nigeria is a member, the average price between January and February 14 was $105 per barrel while the average price in last quarter of last year was $106.43.

    For Nigeria, the oil price hike should be good news. It should mean more money for the Excess Crude Account (ECA), which is the saving made from the oil benchmark and the real oil price. The benchmark for the budget is N77.5. But despite the hike and the stability in the last few months, the ECA has continued to nosedive. Last week, it emerged that the ECA, which was created to provide succour in rainy days for the federation, now has only about $2.1 billion.

    The depletion of the ECA from about $11 billion in December 2012 has been seriously disputed by analysts, who see the withdrawals as unwarranted.

    The status of ECA emerged at the meeting of the Federation Account Allocation Committee (FAAC), where N629.128 billion was shared among the three-tiers of government for January. Gross revenue during the month increased to N540.870 billion compared to N479.950 billion recorded last December.

    Also, revenue from Value Added Tax (VAT) increased to about N82.2 billion in January as against about N64.7 billion the previous month.

    Speaking with reporters in Abuja, at the end of the monthly meeting of the committee, Accountant-General of the Federation (AGF), Mr. Jonah Otunla, said the revenue from mineral sources for the month was N439.562 billion. The non-oil component was N101.308 billion.

    Not long ago, Central Bank of Nigeria (CBN) Governor Mallam Sanusi Lamido Sanusi shocked not a few Nigerians when he drew their attention to the dire consequences of the continuous depletion of the country’s fiscal buffers. Sanusi raised the alarm that both the ECA and the external reserves had been depleted, a development which, he said, undermines the ability of the apex bank to sustain exchange rate stability.

    The CBN boss, who disclosed this at the end of the bi-monthly meeting of the Monetary Policy Committee of the apex bank, expressed concerns that the absence of such fiscal buffers increases the country’s reliance on portfolio flows, thus constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price. Sanusi, who decried the continuous fall in revenue from oil despite the stable price of oil and production in 2013, acknowledged output losses due to theft and vandalism. But he was quick to point out that this could not wholly explain the magnitude of the shortfall in revenue.

    His views tallied with those of Minister of Finance and Co-ordinating Minister for the Economy Mrs Ngozi Okonjo-Iweala, who, at the just concluded World Economic Forum in Davos, Switzerland, also raised the alarm that the economy was under threat on account of the continuous decline of the ECA.

    The ECA, in which the country saves revenue above the benchmark oil price set in the budget, stood at $8.65 billion as at end of 2012. The Finance Minister, however, explained that as a cushion against the depletion, “we have tried to set the country’s main parameters in a very modest way”.

    She added: “We have made our budget at a very reasonable benchmark price for oil. This is to shield us and to ensure we are not subjected to any volatility there may be in the oil market.”

    However, Sanusi and Mrs Okonjo-Iweala’s explanations have failed to impress economic experts, finance analysts and stakeholders in various sectors, who argue that there may be more than meets the eye in the claims that revenue from oil is going down and consequently, the country’s economic buffers are drying up.

    Economist and frontline industrialist Henry Boyo is one of those who are not swayed by such claims. He believes that the claims are designed to bamboozle Nigerians.

    Boyo said: “Its grand deception. Whether advertently or inadvertently, to me as a layman, it is deception. We are being taken for a ride.”

    He described it as red herring contrived to distract the attention of Nigerians from asking real and critical question on how the economy is being managed.

    As Boyo argued, the stage for the alleged grand deception was set when, in the process of setting the budget, which is the country’s operating plan, its formulators allegedly deliberately contrived that the country would receive less revenue than it should actually receive.

    “If in addition to that,” he explained, “you now receive more revenue after you have nonetheless borrowed at between 10-15 per cent interest rate to cover the deficit that became necessary because you understated what your revenue would be; because if you have deliberately understated your revenue expectation to start with, and then you now have more income than expected but because you have borrowed to cover the deficit between expenditure and your projected spending, whether capital or recurrent, does that make sense? Can a surplus and a deficit exist side by side? The answer is no.”

    While insisting that the whole set- up reeks of fraud, the renowned economist said: “You cannot have an ECA when you have a deficit. You cannot be saying you are building up an excess crude account when your budget is predicated on a deficit, especially when the so-called ECA is sitting idle, earning little or no interest. Besides, you now consume it in addition to the borrowing you borrowed to finance the contrived deficit.”

    Boyo said the deficit is contrived because if the projected revenue expectation from crude oil is at the rate of $75 or whatever dollars per barrel and throughout the whole time the price of crude oil stood above 100 dollars per barrel. He added that even if production constraints and theft of crude, which of course, Sanusi acknowledged, takes away 20 per cent in terms of volume from the sales the country is expecting instead of 2.5 million barrels per day, the economy would still not be in a precarious fiscal position.

    Boyo also wondered how the nation’s reserves could have dried up on account of shortfall in revenue from oil when only a few months back, Petroleum Minister Diezani Allison Madueke gave herself and the country thumbs up for exceeding her production quota.

    “There might be production shortfalls in some days, but there were production surpluses in other days. In addition to that, if cumulatively we lost production by 20 per cent, for instance, the difference between the 77 or 75 dollars per barrel and 100 dollars is close to 33 per cent because your budget benchmark is $75, but instead of 75 you are earning more than $25 more per barrel.

    “$25 expressed as a fraction of $75 that you used is about 33 per cent. So if you lost 20 per cent in volume and you gained 33 per cent in price how can you have such a huge deficit to start with that you are financing? If revenue from oil is going down how did they get the surplus? How can you have surplus and deficit at the same time? And how and why must you have borrowed to cover the deficit and similarly consume the surplus you said you gathered above $75 per barrel? Is that not fraud or deceit of some sort?”

    Also curious to Boyo and other observers of the dynamics of the Nigerian economy is the fact that the supposed collapse of the fiscal buffers is coming at a time when various government revenue-generating agencies have strengthened their capacity, resulting in growing revenue inflow into government coffers. Overall, there has been appreciable increase revenue from the non-oil sector. For instance, in 2012 fiscal year alone, the Federal Inland Revenue Service (FIRS) realised as much as N5.007 trillion from taxes. The amount, the highest cumulative tax collected in the history of the FIRS, represented an increase of N379.4 billion or 8.20 per cent over the N4.628 trillion collected in 2011.

    Before Mrs Ifueko Omoigui-Okauru, immediate past executive chairman of FIRS left office, she said in about 11 years, the cumulative revenue from the FIRS hit N21.7 trillion, with N7.53 trillion coming from non-oil sources, while over N13.036 trillion was realised oil revenue during the period. Other revenue-generating agencies such as the Nigeria Customs Service (NCS), NNPC, and the Nigerian Maritime Administration and Safety Agency (NIMASA) among others, have also shored up their revenue target.

    Boyo said if the revenue target of the FIRS has come down since the exit of Mrs Omoigui-Okauru, as well as other agencies, the Federal Government should be asking questions rather than confusing Nigerians by painting a gloomy picture of an economy that ordinarily should be buoyant.

    The industrialist is not alone in his worries over the direction of the economy. Alaba Olusemore, the Managing Consultant, Nesbet Consulting, a Lagos-based firm of finance and management consultancy, is also worried. While noting that the currency denomination the allocation is shared, whether dollar or naira, is not the issue provided it is channelled at production instead of consumption, he said: “The whole story of the depletion of our economic buffers has not been told,” adding that there must be something those managing the economy are not telling Nigerians especially since secrecy is now the name of the game, and people no longer want to be transparent.

    Olusemore listed some factors that could be responsible for the depleting fiscal buffers. According to him, government may have been spending too much on security to contain the threat of Boko Haram insurgents. Besides, the CBN may have been taking money from the external reserves to stabilise the exchange rate of the naira. Also, a lot of money, he alleged, may have been expended on meeting some political exigencies ahead of the 2015 general election.

    “2015 is around the corner, and politics in Nigeria means money; a lot of resources may have been expended on projects based on political exigencies rather than economic,” he told The Nation.

    For now, the government has no convincing answer to why the buffers are going down. So, the people will continue to ask questions.

  • FG, states, LG share N629.12bn for January

    The Federal Government, states and local governments in Abuja on Thursday shared f N629.12 billion from the Federation Account for January, the News Agency of Nigeria reports.

    The Accountant-General of the Federation, Mr. Jonah Otunla, made the announcement when he briefed journalists on the outcome of the Federation Account Allocation Committee (FAAC) meeting.

    Otunla said the distributed revenue, which included Value Added Tax (VAT), had a gross receipt of N540.87 billion for the month.

    He said the figure was higher than N479.95 billion received in December, 2013.

    He described the N60.92 billion increase in revenue in January as a “positive development” considering the disruptions recorded in production and lifting oil during the month.

    The accountant-general said the disruptions included maintenance periods, multiple leaks, pipeline breaks and theft.

    He said the total amount shared by the three tiers of government in the month comprised statutory revenue of N503.68 billion and N7.61 billion refunded by Nigerian National Petroleum Corporation (NNPC).

    Otunla said that other components of the revenue were VAT, N82.27 billion and N35.55 billion from Subsidy Reinvestment and Empowerment Programme (SURE-P).

    He said that VAT recorded an increase of N17.55 billion from the December, 2013 figure of N64.72 billion.

    On the status of the Excess Crude Account, he said that the sum of 2.1 billion dollars was currently in the account, adding that no issue was raised about the account at the meeting.

     

  • Missing $10.8b: FAAC studying issues

    Missing $10.8b: FAAC studying issues

    Members of the Federation Account Allocation Committee (FAAC) are studying the issues surrounding the whereabout of the $10.8 billion the Nigerian National Petroleum Corporation (NNPC) was supposed to remit into the Federation Account.

    Some commissioners of finance, who spoke with The Nation, said the matter was too politically charged for them to comment on. It however promised that its position would be made known soon.

    One commissioner of finance from a Peoples Democratic Party (PDP) controlled state, declined to speak on the matter on the ground that he would like to spare both his state government and the Federal Government from further controversies.

    Two finance commissioners from APC-controlled states also declined to speak on the matter and chose “to err on the side of caution”.

    At a briefing last year, where it was revealed that $10.8 billion was not paid into the Federation Account and not $49.8 billion as alleged by the outgoing governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi, the Minister of Finance Dr. Ngozi Okonjo-Iweala said her ministry and the FAAC were looking into the matter.

    She reiterated this position during her 2014 budget presentation and almost gagged all parties involved from making further comments about the money until the ministry/FAAC meeting had worked on it.

    Last year, Sanusi was said to have written a letter to President Goodluck Jonathan, alleging that $49.8 billion that was supposed to be paid into the account was missing.

    However, Sanusi along with the ministers of Finance and Petroleum Resources addressed told reporters that the amount involved was no longer $49.8billion but $10.8 billion which was undergoing reconciliation by the agencies involved and FAAC.

    NNPC said it incurred the $10.8billion expenditure ”as part of statutory responsibilities which the NNPC as the National Oil Company executes on behalf of the Federal Government and by extension the entire people of Nigeria”.

    While insisting that the fund is not missing, the NNPC added that $8.49billion subsidy claim for 2012 was part of the whole component $10.8billion because for many years the NNPC has been the main supplier of the subsidised Premium Motor Spirit (PMS).

    The NNPC claimed that the Federal Government had not made payment to the corporation  in the name of subsidy during the period under review noting that ”pipeline management and repair cost is $1.22billion while product/crude oil losses is $0.72billion and cost of holding the strategic reserve stock is $.7billion”.

    The corporation said ”as long as it is a transaction, it is always work in progress” and noted that the pipelines were constantly being hacked into and there is no budget from which the corporation can recover the cost.

    According to the NNPC, “The Petroleum Products Pricing Regulatory Agency (PPPRA) offers a mechanism for which under the subsidy regime there is a certain claim to make from  importation or distribution of  petroleum products.

    “However, that template does not have any recovery mechanism for pipelines. Everyone needs to be aware that pipelines are constantly being vandalised in Nigeria, and there is a constant cost of keeping those pipelines running are the cost we are reflecting here.”

  • Rivers N486b budget passed

    Rivers N486b budget passed

    •Lawmakers sit at Govt House

    A MID tight security, Rivers State Governor Rotimi Amaechi presented to the Assembly yesterday a N485.524 billion budget for this year.

    The budget, which is N4.797billion lower than last year’s N490.320 billion, was immediately passed inside the Government House, Port Harcourt.

    The ceremony took place, in spite of protests by the six lawmakers loyal to the Supervising Minister of Education, Chief Nyesom Wike, a former Chief of Staff, Government House, Port Harcourt.

    The capital and recurrent provisions are N247.573 billion and N237.950 billion. The capital to recurrent ratio is 76:24 for the financial year 2014, as against 70:30 achieved as at September 2013.

    The budget, according to Amaechi, who is also the Nigeria Governors’ Forum (NGF) chairman, will be funded by the Federation Accounts Allocation Committee’s (FAAC’s) allocation of N241.243 billion and the Internally-Generated Revenue (IGR) of N92.420 billion.

    Others include balance of N10.717 billion, proposed loans of N100 billion, credit from the World Bank of N6.983 billion, the European Union’s (EU’s) grant of N0.660 billion and the sale of assets of N33.5 billion.

    The Ministry of Works has the highest allocation of N60 billion, followed by the Ministry of Education with N30 billion. The Rivers Urban Beautification, Parks and Gardens, as well as the Auditor-General (State), each has the lowest of 0.080 billion.

    The budget was passed into law, after a few hours deliberations by 23 of the 25 pro-Amaechi lawmakers, led by the Speaker, Otelemaba Dan Amachree.

    The six anti-Amaechi lawmakers, in a joint statement, however, raised the alarm over Amaechi’s plan to present the 2014 budget inside the Brick House (Government House), instead of the hallowed chambers of the Rivers House of Assembly, which was done later in the day.

    Prior to the budget presentation, the Deputy Speaker of the House, Leyii Kwanee, a lawyer, on Rhythm FM Radio in Port Harcourt yesterday, denied the anti-Amaechi lawmakers’ claim and said the people would be informed when the budget would be presented in the Assembly.

    The pro-Wike legislators are Evans Bipi (Ogu/Bolo constituency, the self-acclaimed speaker), Michael Okechukwu Chinda (Obio/Akpor II), Kelechi Godspower Nwogu (Omuma), Martins Amaewhule (Obio/Akpor I), Victor Ihunwo (Port Harcourt III) and Ikuinyi-Owaji Ibani, the Chief Whip (Andoni). They were not at the budget presentation.

    Ibani, until his December 1 last year’s defection to Wike’s camp, was one of the 27 pro-Amaechi members of the Assembly.

    The chief whip is a political “boy” to the Deputy National Chairman of the Peoples Democratic Party (PDP), Uche Secondus, from Ikuru Town in Andoni Local Government Area, but defected at the rally of the Grassroots Development Initiative (GDI), which has Wike as the grand patron) in Ogu, the headquarters of Ogu/Bolo Local Government Area.

    In the earlier group of 27 lawmakers supporting Amaechi and led by Amachree, one of them, Tonye Harry, a former Speaker of the Assembly and deputy to Amaechi while he was speaker for eight years, died last year. He is yet to be replaced.

    Besides the anti-Amaechi lawmakers’ joint statement, Bipi, in a telephone interview yesterday, described the budget presentation as illegal, stressing that the budget could only be presented in the Assembly.

    Amachree said the budget presentation and passage took place inside the Government House, in view of the ongoing renovation at the House of Assembly complex, because of the July 9 last year’s fracas, with most of the appliances and valuable items vandalised.

    Amachree also cited insecurity and not having access to the Assembly complex as other reasons for the Government House budget presentation and passage. He accused Commissioner of Police Mbu Joseph Mbu of taking sides and unable to provide security for the lawmakers to perform their duties.

    The deputy speaker, a lawyer, also insisted that the presentation was legal and one of the constitutional rights and duties of the lawmakers.

    A renowned human rights activist, Ken Atsuwete, who is a Port Harcourt lawyer, backed the budget presentation and passage at the seat of power, while declaring that governance in the state was nor normal, in view of insecurity and uncertainty.

    Atsuwete noted that ingenuity and keeping governance running must be employed in the state, especially with the incessant bomb blasts across the state, particularly in courts and at the office of the Deputy Governor, Tele Ikuru, an engineer.

    The activist (Atsuwete) noted that the budget presentation and passage in Government House amounted to adopting the Doctrine of Necessity, which the National Assembly employed in making Dr. Goodluck Jonathan President, stressing that the legislature and the judiciary were being frustrated, but “the executive must not be frustrated”.

    While speaking live on Rhythm FM Radio in Port Harcourt at 4 pm yesterday, two of the six anti-Amaechi lawmakers: Ikuinyi-Owaji Ibani, the Chief Whip (Andoni) and Martins Amaewhule (Obio/Akpor I), faulted the budget presentation and passage, saying the implementation would be legally prevented.

    Ibani, who has been a lawmaker for six years, said: “The 31 legislators (Tonye Harry, a pro-Amaechi lawmaker and ex-Speaker of the House of Assembly, died last year; he is yet to be replaced) ought to receive the 2014 budget from Governor Amaechi in the hallowed chambers of the Rivers State House of Assembly.

    “There cannot be an exception to the rule. Anything to the contrary is null, void and of no effect whatsoever.

    “You cannot present and pass budget into law in one day. It is laughable. It is an injustice. There is separation of powers. What they did will be challenged in court. It is a constitutional matter.”

    Amaewhule also described the action of the pro-Amaechi lawmakers and the NGF chairman as condemnable.

    The representative of Obio/Akpor I Constituency said: “What took place in Government House, Port Harcourt today (yesterday) was a kangaroo club meeting and not 2014 budget presentation and passage.

    “Budget presentation and passage outside the hallowed chambers of the Rivers State House of Assembly amount to an illegality, unconstitutional and quite shameful. These have never happened in the history of Rivers State.”

    Late last year, the anti-Amaechi legislators attempted to sit in the Rivers House of Assembly, based on the December 10 judgment of the Federal High Court (FHC), Abuja, presided over by Justice Ahmed Mohammed, which declared as unconstitutional, the taking over of the Assembly by the National Assembly, but were prevented by policemen.

    For many weeks late last year, the pro and anti-Amaechi lawmakers and supporters, including the members of the National Assembly, top Rivers government officials and prominent indigenes, protested in front of the Assembly, but were always teargased and dispersed by policemen, who barricaded the Assembly’s gates with Armoured Personnel Carriers (APCs) and patrol vans.

    In view of their inability to access the Assembly, the pro-Amaechi lawmakers, with plastic chairs form the nearby Port Harcourt City council, sat at the centre of Moscow Road, in front of the Assembly.

    The decision of the anti-Amaechi lawmakers and supporters to continue to protest in front of the Rivers House of Assembly, even as early as 4 am, for many days late last year, was to prevent the budget presentation and passage, while also raising the alarm then, of a plan by the pro-Amaechi legislators to sit inside the Government House.

    At yesterday’s presentation were commissioners, other top government officials and eminent Rivers indigenes.

    Presenting the appropriation bill for 2014, christened: “A year of sustained action”, Amaechi lauded the legislators for their “very kind” support and encouragement.

    The budget estimates were based on crude oil benchmark price of $67.5 to create a safety net of $10, in view of the inconsistent nature of the international oil market prices, to enable the government accommodate any shocks resulting from possible fluctuation.

    Amaechi expected his administration’s FAAC and IGR profile to be realistic, based on the modest projections, the reforms and improvements going on in the Board of Internal Revenue (BIR).

    He assured the people that the strategies, coupled with improvements in the implementation of policies and programmes this year were designed to handle the eventualities, while noting that the budget was presented after due consultations with stakeholders within and outside the public service.

    The NGF chairman said: “On behalf of the Rivers State Government, I would like to record our gratitude to Rivers people for supporting and defending the mandate given us in October 2007, to continue to lead the state.

    “In return, we shall be unwavering in our determination to deliver on every promise made to you, to deliver good governance and sustainable development. Neither our personal comfort nor any threat to our persons would deter us from reaching our collective goals as Rivers people.

    “In the midst of these provocations, we will fulfill the promises of our mandate and make our people proud. The 2014 budget will not accommodate new projects. This is in the light of current realities and out of a resolve to guarantee efficient service delivery.

    “The economic realities arising from already-dwindling revenues since mid 2013 suggest a need for prudence and good sense this year. Government will continue to demonstrate good sense of management, by making more money available to finance the ongoing projects for completion next year.

    “The focus of the budget (2014) will be on completing ongoing projects in health, education, roads, transport, power, water, agriculture and other critical infrastructure. The 2014 budget is formulated to achieve the agenda of this administration, with the overall objective of prospering the state and promoting the wellbeing of the people.”

    The Rivers governor also stated that his administration remained indebted to the lawmakers and grateful for all their support, encouragement and good sense of judgment, “particularly at this great moment of the state’s political history”. He urged them to sustain the tempo, in the interest of Rivers people.

    He said: “Posterity will judge your stance fairly, even as today, you have become hallmarks and bastions of our democracy. We at the Executive, reaffirm the commitment of this administration to our people and our stand for justice and equity and fair play.”

    Amaechi also stated that he remained focused and would never be distracted by the antics of the enemies of democracy.

    Prior to the commencement of the deliberations, during their brief sitting, the speaker of the Rivers Assembly (Amachree), stated that the lawmakers decided to continue with their legislative duties in makeshift chambers, in order not to be held to ransom by some persons who did not mean well for the state.

    Amachree called on the House’s Deputy Leader, Nname Ewor, to move the motion to designate the makeshift chambers as the chambers of the House of Assembly, after which the Assembly’s Deputy Whip, Irene Inimgba, seconded the motion.

    Moving the motion, Ewor said: “As it is common knowledge that on the 9th day of July, 2013, there were few events that took place in the hallowed chambers of the Rivers State House of Assembly.

    “In that circumstance, our computers and a few other items in the chambers, including the entire complex, were destroyed. As a result of this, our chambers are not ready for use, because the executive arm of government will have to undertake holistic repair and renovation of the complex.

    “In this circumstance, I move that this auditorium be designated as a temporary sitting place of the Rivers State House of Assembly, until such a time that the executive would finish with the renovation of the permanent Assembly complex that will enable us to carry on with our legislative business. I so move.”

  • From my crystal ball

    It’s been boom time for the practitioners of the futurological art of crystal gazing. Not that there could have been a better season for our hordes of diviners to spew forth all manners of strange brews described as “prophecy” than the countdown to a new year. The cult of Nostradamus has not disappointed with their pronouncement on virtually everything under the sun: from politics to finance, commerce, energy, and security – just name it. It is a measure of the attraction to the undying art that the practice has flourished over the years, more so in our clime.

    And what have they said?

    Common to all is the prognosis of a difficult year ahead, a defining one at that.

    Let me say also that I have done some crystal gazing and therefore share in the general premise that the incoming year has all the elements to make it a defining year. I start with the tectonic shifts in alliances that birthed All Progressives Congress, (APC). If that marked the emergence of an opposition finally poised to wrest power from the arrogant PDP, it is in another respect, a clarion call to battle on several fronts.

    Does anyone see mere coincidence in the so-called industrial scale theft in the oil sector and the financial scorched-earth policy visited on the states for the most part of 2013? I mean the dubious alibi of oil theft, in which the federal government and its fellow-traveller in perfidy, the NNPC, would seek to leave the states enfeebled? Does anyone rule that out as the beginning of the process of weaponisation of the instrument of federal allocation?

    So what to expect in the incoming year?

    Richter-scale level of theft in the oil sector? Full-scale weaponisation of the fiscal instrument in the hands of our rampaging bull in the China shop? More brazen absurdities in the computation of the distributable pool by the NNPC?

    Obdurate states had better beware.

    Here is what the crystal ball shows for the coming months: the states can make all the noise in the world about the cheating game at the Federation Account Allocation Committee (FAAC) meetings, nothing would change. The behemoth is not about to budge. Rather, expect the behemoth with a hefty 54 percent to continue to play the thief-catcher with states whose allocations average less than one per cent. That is how it’s always been; and so would be in 2014 and beyond.

    By the way, you don’t expect the federal government with its awesome power of patronage to engage with objectors in its rank and file; it’s a sign of weakness. So, in 2014, it’s fight to finish.

    As an aside, more of state government officials should expect to be unwilling guests of the EFCC. Jigawa and Kano are already in; Rivers, Sokoto, Kwara and possibly Niger should beware. This, the oracle says, is only a dress rehearsal for their war on corruption. As for the stench oozing from their backyards the latest of which came from Stella Oduah’s Aviation House of sleaze, it is supposed to be proof of the administration’s affirmative action that big time impunity pays!

    So what is for the ordinary man on the street in terms of governance in 2014?

    Time again to consult the crystal ball.

    I start with the power sector – a sector that many have come to accept as offering the brightest prospects of a turn-around. Nigerians by now must be wondering what the hoopla was after the successful take-over of the PHCN entities by the private sector. Here again, the problem appears to me as the tendency to confuse the means for the end. No one argues about the fact that the retention of the PHCN in the hand of government is akin to a sentence of death on an already comatose sector. But then, it is also not the same as suggesting that a mere change of ownership is all there is to it to make things happen?

    Now, I must say that the problem is not unknown. Neither is the solution rocket science. The problem is that of under-investment of the past years. The solution is to bridge the service gaps in the shortest possible time. And the way to do that is to invest massively in new technologies and business models to improve on service delivery.

    This is where my crystal ball tells a different story. As far as the prospects of improvement go, 2014 may end up as a disappointment. To start with, the new wonder owners of the power entities haven’t even begun to convince us that they know what the business entails let alone what they need to put in place to turn the sector around. Now, Nigerians are fast finding out the world of difference between abdication and liberalisation – the result of the astounding bad faith and ignorance across the board.

    My crystal ball tells me that 2014 is the year of awakening for all.

    Now to Olusegun Aganga’s so-called auto-policy. If ever a policy was conceived in conceit and ignorance, that policy must be it. What’s the idea if one may dare to ask? To join the league of auto manufacturers? Now, that is supposed to be grand except that in this instance, the minister would rather we start building our houses from the roof.

    You ask: how does a 100 percent hike of auto duty assist Aganga’s phantom auto assemblers in an economy where the existing capacity is next to zero? Where is the infrastructure? Or is it simply about producing some fanciful contraptions that no one would be able to buy? If I may be more specific, where is the infrastructure of credit to make his grand dream sustainable in the long run? Or is Aganga thinking of made-for-government only vehicles? Why the hurry to inflict punitive tariff on car importers in 2014?

    If anyone ever needed evidence of how detached some of our policy makers are from reality, that so-called auto policy is one. Thanks to Olusegun Aganga, our long-suffering middle class will suffer the affliction of paying more for their favourite tokunbo just to satisfy the whims of some high-minded officials. The same is no less true of Aganga’s kinsman in the Agriculture Ministry who has already moved to ban rice import when he cannot even guarantee local sufficiency.

    As for the unprecedented youth unemployment, the ostentation in the midst of ravaging poverty, the corruption in high places, the day of reckoning is certainly near! At least that is what my crystal ball says.

    Happy New Year to all!

  • FG, States, LGAs share N675.6b for November

    The Federation Accounts Allocation Committee (FAAC) has shared the sum of N675.650 billion, including Value Added Tax for November.

    The Minister of State for Finance, Dr. Yerima Ngama, made this known in Abuja when he briefed journalists on the outcome of the FAAC meeting which ended early hours of Friday.

    “The distributable statutory revenue for the month is N540.754 billion, which is N81.853 billion more than the previous month’s revenue.

    “Also distributed is the sum of N7.617 billion refunded by the Nigerian National Petroleum Corporation. In addition, the sum of N35.549 billion is proposed for distribution under the SURE-P Programme.

    “The total revenue distributable for the current month is N675.650 billion, including the value added tax of N91.730 billion,’’ the News Agency of Nigeria quoted the minister as saying to journalists.

    A breakdown of the distribution showed that the Federal Government received N252.239 billion, representing 52.68 per cent, states N127.939 billion, representing 26.72 per cent, while local governments received N98.636 billion representing 20.60 per cent.

    He said that a total of N56.390 billion representing 13 per cent derivation revenue was shared among the oil producing states.

    Ngama said that a total of N675.650 billion revenue was received for November, the figure was higher than the N568.413 billion received in October, giving a difference of N107.237 billion.

    On VAT, the minister said the revenue collected in November was N91.730 billion as against N66.346 billion distributed in October.

    He said there was an increase of N25.384 billion from the November revenue and that of October.