A Federation Account in trouble!

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After several failed attempts by the Federation Accounts and Allocations Committee, FAAC, to share federally collected revenue to the 36 states, the deadlock was partially broken penultimate week with the sharing of nearly N1.196 trillion to the three tiers of government for the months of August and September, temporarily ending the financial drought in many states and bringing some relief to the state governors and their people.

However, the staccato style of collecting and sharing public revenue, which used to be a seamless and transparent exercise, leaves many Nigerians wondering what has gone amiss in the process and triggers the question: Where has all the money gone?

Not many Nigerians seem to be aware of the drama that has been playing out at the meeting of the Federation Accounts Allocations Committee, FAAC, lately. In fact, if the plots had been recorded, they would have been enough to make a full length Nollywood film. The 36 states Commissioners for Finance, who have been meeting with the Minister of State for Finance at the Federal Ministry of Finance and Economic Planning monthly, have never had it so bad. None of them expected that a normal exercise of meeting and sharing the money that has accrued to the purse of the Federation at the end of the month could be turned into a muscle-flexing and tongue-lashing endeavour.

But that is what they have been getting recently whenever they gather for the ritual of sharing what rightly belongs to the people of Nigeria. The drama, which ensued on Monday, September 16, in the Finance Ministry, Abuja between the Accountant General of the Federation, AGF, Mr Otunla, and the finance commissioners, drawn from states, was a shocker that rattled both teams and left sour taste in their mouths. The commissioners came to collect their August allocations and the balance of the shortfalls for July, but they returned home with empty purses and long faces to the chagrin of their respective governors and people.

The bottom line is that the money that is being declared as accruals into the FAAC has been lower than the expected revenue as projected in the 2013 budget. According to the OAGF, the Federal Government only met its revenue projection for the month of July this year. By implication, government has been running short of its projections in the other months, raising the bar for a financial crisis in the country. According to the OAGF, the declining finances of the Federal Government was due to unrelenting oil theft and pipeline vandalisation.

That claim, to many, may not hold any water because the strident cries of the past have since forced the Federal Government to dish out juicy contracts to former Niger Delta warlords to police the waterways and block those who are keen on stealing Nigeria’s crude and refined products. Currently, the House of Representatives is investigating why a whopping sum of $32 million was paid by the Nigerian Maritime and Safety Administration Agency, NIMASA, to a firm said to be owne

d by Tompolo, one of the ex-militant leaders, who is close to the corridors of power in Abuja.

Nigerians are still divided on the workability of engaging former militant leaders, who understand the importance of trading in crude for arms and funds, as security contractors for the same business they effectively sabotaged for nearly five years until the late President Yar’Adua offered the olive branch in the name of amnesty, which has boosted oil production to over two million barrels per day.

In the days of the disruption, oil production was said to have plummeted to a paltry 700,000 bpd. The irony of the increment is that there is still not much money to share to the states. The situation appears to be that the more oil that is pumped, the less money that is paid into the FAAC for sharing by the three tiers of government.

The OAGF insists that government has been recording declining oil revenues since January this year. The Office maintains that apart from the surplus the government recorded in July, it has been witnessing a deficit for the rest of the months.

“The Federal Government had projected a monthly earning of N702.54bn in the 2013 budget, but it only surpassed that target once during the first seven months of this year, earning N651.26bn in January, N571.7bn in February and N595.71bn in March, the OAGF said.

“In the months of April, May, June and July, the revenue earned by the country was N621.07bn, N590.77bn, N863.02bn and N497.98bn respectively.

Arising from non-remittance of full revenues to the FAAC for sharing to the three tiers of government, the states claim that they are being owed arrears amounting to N140 billion, which they want liquidated by way of monthly augmentation by the Federal Government as was the practice in recent past. But the Federal Government disagrees with the figure and the practice of augmenting allocation based on budget projections.

The Minister of State for Finance, Yerima Ngama, at a meeting with the states finance commissioners, made it clear that only the sum of N75 billion was outstanding as arrears of unpaid differentials for the year and not N140 billion as claimed by the commissioners. Ngama insists that, henceforth, monthly allocations will be shared based on accruals and not augmented based on budget projections, as they may not always add up.

Walkout

In fact, it was the sharp disagreement between the Federal Ministry of Finance and the state commissioners that led to the walkout staged by the latter when the met on September 13, to share the funds meant for August. The commissioners, led by their chairman, Timothy Odaah, had assembled at the Finance Ministry headquarters on the invitation of the AGF, Otunla, hoping to get the arrears for July and the full payment for August but that did not happen, leading to a protest. Apparently fearing a face-off from the commissioners, both the Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, and the Minister of State for Finance, Ngama, stayed away from the meeting and left the AGF to deal with the commissioners. Otunla faced a revolt midway into the meeting.

Odaah fumed, “We were invited by Minister of State for Finance, who is the chairman of FAAC, but we have not seen him. The AGF addressed a few of our executives and told us no money was available for sharing. We appreciate the efforts of the AGF but the minister has chosen the path of playing levity with our case.

“We have been slighted and viewed with contempt to the extent that the interest of our states and local governments is suffering. He (Ngama) has treated our states and local government councils with contempt”.

By their action and utterances, it is clear that the states do not believe the story being churned out by the Federal Ministry of Finance that oil revenues have dwindled. The belief among the state governors is that the funds coming into the general purse for sharing have been tampered with by the Nigerian National Petroleum Corporation, NNPC, so as to increase the federal share and further reduce their own.

Edo State Governor, Adams Oshiomhole, known for his boldness and fearlessness, took up the NNPC the other day, accusing it of not remitting a total of N2.3 trillion into the FAAC, thereby increasing the financial woes of states, an accusation the corporation did not take lightly. Shortly after Oshiomhole had fired his salvo, NNPC returned fire, warning him to desist from raising false alarm aimed at distracting the corporation from its transformation agenda. The corporation claimed that it was not indebted to FAAC in anyway, having been consistently and promptly remitting oil receipts to the Federation Accounts with the Central Bank of Nigeria.

The corporation said it was not owing government any amount taking into consideration the amount it was paying on subsidies and associated costs of operations and losses. It did not however give any tangible figure to buttress its claim and the period for which such expenditures and losses were incurred.

The NNPC’s statement, released by Tumini Green, Acting Group General Manager, Group Public Affairs Division, said Oshiomhole’s allegation was aimed at distracting it from the pursuit of the transformation of the oil and gas industry.

She said, “We wish to state without any equivocation that we do not owe the Federation Accounts any money as of today, taking into account the outstanding subsidies and other associated costs of operations and losses.

“We have consistently paid all money due to the FAAC as we receive them.”

Green however played into the hands of the governors when she admitted that not all revenues collected by the NNPC were paid directly into the Federation Accounts with the Central Bank of Nigeria.

According to her, some are being paid into the accounts of the relevant government agencies, like the Federal Inland Revenue Service and the Department of Petroleum Resources.

“But eventually, all these payments were credited to the accounts of the FAAC,” the statement added.

Green stated that another important issue, which was not taken into account by critics, was the outstanding debts owed the NNPC by the Federal Government, especially from oil subsidy.

She said, “Nigerians may wish to recall that in the wake of the January 2012 subsidy saga, there was no budgetary provision for subsidy to the NNPC, and again, in 2013 there was no budgetary provision for subsidy to the corporation”.

Instalmental payment

But it has emerged that the NNPC is still indebted to FAAC and that government is aware. At the belated sharing of the August and September allocations, Ngama alluded to the debt being owed FAAC by the NNPC when he declared that the corporation had so far made 27 monthly instalmental payment of N7.6 billion into FAAC.

The instalmental payment, according to Ngama, was to offset the debt the corporation was owing government. It was learnt that the corporation was still owing the FAAC six instalments of N7.6 billion; a revelation that rubbishes the denial by NNPC that it does not owe government.

The 36 state governors are not happy with the way the finances of government are being handled by the managers of the economy, putting the blame on the doorsteps of the Finance Minister, Ngozi Okonjo-Iweala, who also coordinates the economy.

They state CEOs are convinced that the economy had been messed up and the decay in the system carefully manipulated by the minister to give Nigerians the false hope that all was well. At a recent meeting in Abuja, the governors were upset to learn that despite huge revenue earning of over $1.05 trillion reported by the Central Bank of Nigeria for July, the Finance Ministry was unable to remit the statutory allocations in full to states and local governments.

While the CBN had boasted that the federally collected revenue rose to $1.05 trillion for that month, the Finance Ministry only distributed a paltry N715.845 billion.

The governors, who discussed the development in the financial sector during their meeting, felt that the Coordinating Minister for the Economy was uneconomical with the true position of the economy and should give way for the interest of the nation.

A governor, who attended the meeting, confirmed to Sunday Vanguard that they were convinced that the minister was merely joggling figures to give Nigerians the false impression that the economy was on a sound footing when the reverse was the case.

“Most of the governors want the finance minister to go because the indices on the ground do not match the figures she continues to churn out on a daily basis concerning the performance of the economy”, he said

“We strongly disagree with the minister that the Nigerian economy has created the kind of jobs and attained the level of stability she claims when most qualified Nigerians are roaming the streets in search of non-existing jobs.

“Last month, we were not paid all our allocations even though the CBN released figures showing that the nation even earned more revenue than the preceding months.

“As a result of the action of the finance minister, all the states are being owed various sums of money arising from withheld monthly allocations.

“We cannot allow this sort of deceit to continue unchallenged and Nigerians must ask the minister to quit now rather than stay on to manipulate the economy for the benefits of a few influential persons.”

‘I won’t resign

But Okonjo-Iweala immediately fought back, saying she would not resign her appointment since she was working hard to move the economy forward and change the conditions of Nigerians.

She said she was not contemplating resigning but helping President Goodluck Jonathan to transform the nation through sound economic policies and programmes.

“She said: “As you see me here, do I look any close to resigning? I dey kampe.

“We should stop talking about political issues here. The economy should be managed for the good of Nigerians. That is why we are here. Let’s face the facts of the economy”.

The grandstanding notwithstanding, the economy continues to receive favourable ratings from major assessors, like the Standard and Poor’s and the International Monetary Fund. Because of their faith in the economy, Nigeria led a big delegation to the just-concluded meeting of the World Bank/IMF in Washington and they made elaborate swank about the robustness of the economy but that brag merely elevates the question: Where has all the money gone?