The House of Representatives will begin the scrutiny of the 2014 Appropriation Bill this week. VICTOR OLUWASEGUN and DELE ANOFI examine the aspects of the budget that may deepen the existing conflict between the Presidency and the House.
The budget controversy is not over yet. The document was submitted to the National Assembly was late. The budget, according to many legislators, has not reflected any serious attempt by the Federal Government to alleviate the suffering of the masses. They also frowned at the delay, stressing that timing is critical to its passage and implementation.
The N4.6 trillion budget, which was laid before the two chambers by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, on December 19, last year is likely to be a bone of contention between the executive and legislature as the National Assembly resumes sitting this week.
The House has already complained about the breach of the Fiscal Responsibility Act by the Federal Government. The legislators pointed out that the government failed to submit the Medium Term Expenditure Framework (MTEF), six months before the budget was laid before the National Assembly. The Spokesman of the House, Zakari Mohammed, said that the breach has implications for the due process.
This year’s budget is premised on 2.3883 million barrel per day. Many lawmakers are of the opinion that a budget in which the recurrent expenditure is over 72 percent and the capital expenditure is 27 percent may be counter-productive.
Last year, the differences in the crude oil benchmark between the National Assembly and the Executive on the one hand, and the two chambers on the other, were resolved. While President Goodluck Jonathan proposed $74, the Senate approved $76.5. But, the House raised it to $79, contrary to the position of the joint Committee of the two chambers on the MTEF.
The Minority Leader, Hon. Femi Gbajabiamila, who spearheaded the opposition to the $76.5 benchmark, said that, since the MTEF was a rolling plan, it was better to stick to the 2013 benchmark. He was supported by the members of the House.
A five-member conference Committee on the 2013-2015 Medium Term Expenditure Framework set up by the Speaker, Aminu Tambuwal, met its Senate counterpart and agreed on the $ 77 per barrel as the oil benchmark for the budget. The members of the committee are the Chairman, Finance Committee, Abdulmumin Jibrin, the Chairman Aids, Loans and Debt Management, Adeyinka Ajayi, Daniel Reyenieju, Abdulrahman Terab and Fort Dike.
Recent analysis of the budget has shown some projected expenditure in the budget, which may generate a fresh row between the Presidency and the House during the budget debate. For instance, in the budget, the Federal Government plans to spend N7 billion on the proposed ‘National Dialogue’. The All Progressives Congress (APC), which is now in majority in the House of Representatives, thinks that the ‘National Dialogue’ is a waste of time.
The fact that President Goodluck Jonathan did not give a breakdown of how the funds would be utilized may not help his case.
The Minister of Finance, Mrs. Ngozi Okonjo-Iweala, said: “The Capital budget is N1.1 trillion; its about 27 percent of the budget and the recurrent is about 72 percent”. She explained that the budget, which excludes the SURE-P of about N268 billion for the Federal Government, “is the budget that continues Mr. president’s drive to really diversify the economy and create jobs.”
The public perception is that the House of Representatives is more thorough when it comes to budget scrutiny. There was a rift between the House of Representatives Committee on Finance and the Minister of Finance over “the 50 questions on the economy” last year.
The Finance Committee had generated the questions after reviewing key aspects of the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper ( FSP) submitted to the National Assembly by the Presidency. The committee focused on crude Oil production, Crude Oil benchmark price, revenue management and diversification, debt profile and debt service payment, high non- debt recurrent expenditures, capital projects implementation and financing terms amongst others.The committee said that the House would not consider the budget, until the questions are answered. The committee gave the Minister two weeks to answer the questions in writing. Last week, the minster forwarded his reply.The Chairman of the House Committee on Rules and Business has said that the budget consideration was one of the important issues on the agenda of the House this week. Hon. Zakari Mohammed said that the minister’s response to the 50 questions will aid the House during the debate.”The Finance Committee was given a responsibility by the mandate of the House and the Committee must report back to the House what it was asked to do,” he said.
The Minister of Finance seems to have eventually understood the import of the position of the lawmakers on the 50 questions by responding with a document of over one hundred pages. Areas that may further cause friction between the Presidency and the House are not difficult to envisage. One of these is the alleged fraudulent utilisation of the ‘Service Wide Vote’ in previous budgets, which may cause the House to put this component in the 2014 budget under the microscope.
The House Committee on Public Accounts headed by Solomon Olamilekan-Adeola has vowed to probe the misappropriation of the Service wide vote. He alleged that trillions of naira were wrongfully applied.
For this year, the capital expenditure figures captured under the Service Wide Vote of the Federal Ministry of Finance is in excess of N433.5 billion. Although the lawmakers may welcome the N100 billion meant to finance constituency projects for federal legislators, they may likely scrutinise the remaining expenditure on the service wide vote, which include N62.8 billion for special intervention, N8 billion for national job creation scheme; N30 billion for the sinking fund for infrastructural development; N14 billion for Nigeria Electricity Liability Management Company (NELMCO) and N16 billion for the bulk trader.
Uunder the miscellaneous heading of the service wide vote, N27.5 billion is proposed for the unexplained contingency funding, while N5,149,600,000 will be set aside for adjustments to the recurrent budget. There are other nebulous expenses. They include N5 billion for capital cost adjustments, N21 billion earmarked for election logistics support and the N7 billion proposed for payment of outsourced services for the Federal Government and another N10 billion for a special account not specified.
With the service wide vote, the Ministry of Finance gets the largest chunk with N1.6 trillion allocation from the budget proposal. This total allocation of N1,653,424,146,940 is 35.6 per cent of the budget for 2014.
The position of the Public Account Committee was that the Service Wide Vote should not be more than five percent of the budget or it should be eliminated from the budget. The Committee believed it is a drain pipe on the economy because it is often manipulated and subjected to abuse, to the detriment of the economy.
Also, there is the issue of the non-compliance of MDAs with Section 22 of the Fiscal Responsibility Act, which mandates government-owned corporations listed in the schedule to the Act to pay 80 percent of their operating surplus into the Consolidated Revenue Fund (CRF) of the Federal Government. In a document by the Fiscal Responsibility Commission to the House Committee on Finance, the Commission said many of the MDAs are saying they could not comply with the section because of “Presidential Directives.”
Consequently, the House Committee on Finance held an investigative hearing to ensure that the internally Generated Revenue (IGR) of listed corporations are captured in the revenue framework viz the 2013 budget. It is also expected that the lawmakers would demand that all of over 800 MDAs of government would be listed in this year’s budget. How the hitherto unlisted MDAs would react to the new development remains to be seen, as the remittance of government share of the IGR was shrouded in secrecy.
The reduction in the expected income to the nation due to oil theft is one area that will generate controversy. Okonjo-Iweala, while giving reasons for the lower budget estimates for 2014, as against that of 2013, said: “ You can understand that we have some revenue challenges, which we had been very clear on all along because of the losses we suffered in terms of oil revenue. Also, there are losses from non- oil revenue due to the lower customs duties. But the House is not likely to accept this excuse.
During the inauguration of the Ad-Hoc Committee on Crude Oil Theft on December 11, last year, Tambuwal accused the Presidency of collusion in crude oil theft. He said: “We must realise that, without the protection of highly placed people, without the connivance of officials and experts in the sector, the activity of illegal bunkering would have been curtailed long ago.
“No country can endure such blatant rape of its resources by a few criminals, who seem to grow bolder by the day. And no self respecting parliament can watch this kind of gross sabotage and not intervene.”
Mitchell Rivasi The Acting Co- President ACP- EU, Michael Rivasi, said at the 10th regional meeting (West Africa) of the ACP-EU Joint Parliamentary Assembly in Abuja in July last year, that the loss of 400, 000 barrels of oil per day is huge. She said that there must be collusion by government officials and the major oil companies.” We need to get traceability on oil to avoid theft. We need to apply the Kimberly process. Every oil has its DNA, Major criminality is involved. How can you have 400,000 barrels stolen in a day?”
She suggested that the international community should not “take oil that has no certificate of origin” but further wondered “how will this be effective if the government officials are colluding and are issuing the certificate of origin for stolen oil?
The House may therefore, not accept the assertion that the oil theft is the major reason for the reduction in the 2014 budget because of its belief that the Federal Government is aiding it. Besides, the legislators are cynical about the claim of a reduced income in the face of the accusation by the Central Bank Governor, Mallam Lamido Sanusi, that the Nigeria National Petroleum Corporation (NNPC) failed to remit $49.8bn to the Federation Account from January, 2012 to July 2013. Although the missing $49.8 is said to have been creatively scaled down to $10 billion, the Presidency is seeking the resignation of the CBN Governor over the misinformation. Gbajabiamila said that the House would not assist the President in sacking Sanusi, adding that, when the National Assembly asked Jonathan to sack Oteh, the Director-General of the Securities and Exchange Commission, he refused.
Obviously, the missing fund may be another source of contention during the budget consideration.
Another issue is the flagrant contravention of the appropriation law the Executive. In this case, the issue of the N255 Armoured cars purchased by the Aviation Minister, Ms. Stellah Oduah, readily comes to mind.
The report by the Nkiruka Onyejeocha-led House Committee on Aviation had urged President Jonathan to review the continued engagement of Stella Oduah as the Minister of Aviation due to the roles she played in the procurement of the vehicles for her use by the Nigerian Civil Aviation Authority (NCAA)
The report, which indicted the Minister of having contravened the Appropriation Act, 2013 and the approved revised thresholds by exceeding the ministerial approval limit of N100 million, was considered and adopted by the House. The Minister approved N643m for the purchase of 54 vehicles.
The debt sustainability will be another point of focus in the 2014 budget. The debt stock, as at June 2013, stood at US$6.9 billion. The unbridled borrowing has always been a sore point between the Executive and Legislature. Recently, the Adeyinka Ajayi-led House Committee on Aids, Loans and Debt Management, began to probe the debt profile. But the Federal Government has always claimed that it borrowed based on the national need, adding that over 40 percent of the country’s debt stock was incurred by the states.
A letter from the Secretary to the Government of the Federation ( SGF) Senator Anyim Pius Anyim, in response to a query from the House of Representatives on the non-compliance with the Fiscal responsibility, in terms of overt borrowing, said: “The Federal Government is quite clear and definite with its policies and strategies for borrowing and public debt management. Hence, it recognizes that it would borrow only when it is absolutely necessary and as much as possible on concessionary terms.”
Anyim argued that the Federal Government is “ guided by the 3 per cent fiscal deficit/GDP ratio prescribed by the FRA, 2007.”
In spite of this, the House Committee on Finance has lamented the non-existence of a debt exit strategy by the Executive
The poor implementation of the previous budgets will also likely come up for debate. Speaking of the 2013 budget releases and implementation, the Finance Minister, Mrs. Ngozi Okonjo- Iweala told reporters on December 19 last year that: “of the previous budget implementation, I believe we released 64 percent of that budget.”
But members are likely to question her assertion as the House believes that implementation of 2013 budget did not even reach the 40 percent threshold. Recall that the House had once threatened President Goodluck Jonathan with impeachment over low budget implementation.
Subsidy funding might be another sore point between the House and the Executive. The Dakuku Peterside-led House Committee on Petroleum Resources (Downstream) has been mandated to probe the NNPC over the subsidy for Dual Purpose Kerosine (DPK) to ascertain the actual amount spent on kerosine subsidy from 2010 to 2013. Dakuku said that the country had spent over N63bon subsidizing kerosine in the last three year, i.e 2010,n2011 and 2012 at N110b, N320b and N320b respectively for those years.
But conflicting claims by the Minister of Finance and the NNPC on the source of money through which kerosine is subsidized and the amount involved therein would set the House scanning subsidy components in the 2014 budget thoroughly. Of the N4. 6 trillion proposed as the 2014 budget, subsidy estimates and debt payments would cost over N2 trillion.
The plan for the Presidency to deposit N1.5bn for an 11th aircraft in the presidential fleet may meet with reservation. Already, the aircrafts of the PAF include two Falcon 7X jets, two Falcon 900 jets, a Gulfstream 550, one Boeing 737 BBJ (Nigerian Air Force 001 or Eagle One), and a Gulfstream IVSP, one Gulfstream V, Cessna Citation 2 aircraft and Hawker Sidney 125-800 jet.
A lawmaker joking said: “the House may not approve this item unless, of course, the Presidency is able to convince members that it is starting a viable commercial airline operation.”
The fact that the President and Vice President Namandi Sambo are to spend N2.4 billion for both foreign and local trips may not go down well with the lawmakers, neither would they rush to approve N34.5 million for the purchase of two animals for the Villa Zoo.
Nigerians also expect the lawmakers to be interested in knowing why over N2 billion was allegedly budgeted by an establishment like the National Mathematical Centre (NMC), Sheda, for the fueling and maintenance of aircraft, sea boats and railway equipment which it does not have.
The Centre reportedly appropriated “N509,216, N429,056 and N465,522 on the maintenance of aircraft, sea boats and railway equipment” with an extra N293,974 and N421,224 earmarked for same.
Sequel to the consideration of the 8-clause recommendation in the report by the House Committees on Finance, Appropriation, Legislative Budget and Research, and Aids, Loans and Debt Management, the accepted parameters for 2014-2016 MTEF were: (i) “Crude Oil production of 2, 3883 mbpd, 2,5007mbpd and 2,5497 mbpd for 2014, 2015 and 2016 respectively; (ii) “average exchange rate of N160/USD for the next three years; The third clause, “ adoption of US$76.50 per barrel as the benchmark price of crude oil,” was rejected after a stormy debate.(it was eventually agreed at $77 by both chambers (iv) “Corporate Tax and VAT rate of 30 percent and 5 percent respectively; (v) “ that the Government should strengthen and consolidate its fiscal strategy to narrow the gap between projected and actual revenue for the period 2014-2016 curtailing oil theft and diversifying the economy to increase tax bases so as to increase tax revenue; (vi) “ that the details of the SURE-P projects to be executed be attached as an addendum to the annual budget estimates for approval by the a National Assembly.
As the House resumes plenary from the Christmas and New year break, and begins consideration in the 2014 budget, it is apparent that it will definitely not be business as usual.
Though the issue in which the House advised President Goodluck Jonathan to sack the Director General of the Security and Exchange Commission, Arumah Oteh because she is not qualified and the refusal of the do such, and the same treatment the President gave the House Committee on Aviation’s report on the N255 million armoured car scandal involving the Aviation Minister, Stella Oduah, has cast the National Assembly as a toothless bulldog, members say a more assertive NASS is in the offing.
Speaking on if or not the House would be thorough in considering the 2014 budget, Dakuku Peterside, Chairman House Committee on Petroleum Resources (Downstream) said:
“The members of National Assembly are duty bound to defend the interest of Nigerians. They have a responsibility to ensure that funds are judiciously applied for the good of all Nigerians not for the good of individuals. They are under a moral duty, they are under oath to defend the interest of the generality of Nigerians especially the common man on the street,
“ It is not the elite that voted them into power, the elites in all communities are infinitesimal, not more than 2 percent of Nigerians. And so, 98 percent of the common people put them in power. And I don’t believe that under the leadership of Tambuwal, the House will renege on that duty- it will not. So, I’m confident that the House of Representatives which is the custodian of the budget will do justice to this budget and the final outcome will impress Nigerians.”
Mohammed was emphatic last week that the House will not be a rubber stamp for the 2014 budget. “We must consider the budget because its a money bill, but we will not be blackmailed or bamboozled to just assume its a case of garbage in, garbage out. Anybody who thinks it is going to be like that is just joking because we are going to ensure a sense of fairness in its consideration to the benefit of Nigerians who are our employers,” he said.
