Fashola: Delay in Federal Allocation Distorts States’ Programmes

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Lagos State Governor, Mr. Babatunde Fashola (SAN), Thursday said the delay in the remittance of statutory allocations from the Federation Account to the state had distorted the programmes of state government.

Likewise, the governor faulted the accounting report of the Nigerian National Petroleum Corporation (NNPC), while lamenting the inefficiencies, which he said, were characterised by accounting process for oil revenues.

He expressed the concerns at the State House, Alausa, after the third-quarters budget review, which according to him, fairly performed at 70 per cent contrary to the budget performance of 83 per cent recorded mid-year.

He attributed the drop in the budget performance to the revenue shortfall, which he said the state “has been experiencing, and the delay in statutory allocation revenue that is supposed to be coming from the federal government.

“This includes delay in the remittances of allocations and lack of agreement on NNPC accounts at the Federal Accounts Allocation Committee (FAAC) meetings. I think over two months now (between August and September), the FAAC payment did not come on time. The augmentation also did not come on time.

“As far as I am aware, not all of it has probably come from the last report that I got. So, this puts our planning into some distortions. As a country, we cannot continue to have this distortion in revenue collection and projection where the largest source of revenue comes from a single item."

Fashola acknowledged that the state government had to resort to short borrowing whenever the state ran out of cash, noting that the state “does not really keep reserve because everything is planned against the expectation and commitment that we have made. So, it creates distortion and sometimes increases our deficit.”

He, therefore, canvassed for the need to put a stop to the inefficiencies, which he said, were characterised by accounting process for oil revenue, thereby questioning the reported loss of 400,000 barrels of crude oil per day.

The governor said: “If they are reporting some of the excuses that we heard, 400,000 barrels of oil is being stolen. The story does not change. Some of the questions really are: Is it a fixed amount of oil being stolen every month? Even if oil thieves do not change, is it still the same amount? We need to look at this thing more rigorously.

“The questions to ask really are: where are these shortfalls coming from? Where is this theft coming from? Is it the local crude oil that we should refine for consumption that is being stolen? If that is it, interestingly there has been no fuel queue in the country recently. It does not make sense to me. If it is what we sell for exports, I am not aware also that we have breached any of our agreements with our major buyers.”

He added that there was no such reported incident, noting that those “are things that should be reported at the FAAC meeting. They should be able to tell at the FAAC meeting that because we did not sell the number of barrels, that is why we did not have this money. There are questions we will be taking up at the appropriate forum.”

The governor also acknowledged that the state government felt the impact of delay in federal transfers, though said it did not feel much due to the fact that its dependence on statutory allocations “is very low compared with other states.”

According to the governor, if you do not earn it, you cannot spend it. It affects everybody, but of course in varying degree. If you look at it, our dependence of statutory allocation as a state is not as high as the dependence of other states. Even then, what it simply means is that if the commissioners for finance, who go to Abuja, do not agree to accounts and remittances cannot be made, it means money is not transferred.

But Fashola said the state government had use its internally generated revenue (IGR) to pay salaries, explaining that the revenue from the state’s IGR that should be used to pay contractors were used “to keep the public service going. Of course, when the payment comes back, we will come and pay later. So, that distorts so many things.”

On the budget performance, Fashola said the state recorded 70 per cent in the third quarters, saying it “is a slight deeper in the overall aggregate of 72 per cent mid-year review to 71 per cent now. But it is a larger deep from 83 per cent for the second quarters standing alone to 70 per cent for the third quarters standing alone.”

But the governor said the state government would rather focus on the positive side of the budget performance, thereby linking it to the combination of work done and payment made.

According to him, “I am happy to report that most of infrastructure projects are making progress. Roads are being completed in Epe, Ajah, Agege and Ajao. The Ajao link bridge has been completed now. We have completed the Iju road by-pass from Capitol Road. Road projects which are going on in Ikeja GRA are, already approaching completion."

The governor added that drainage works, primary health centre, cardiac and renal centre in Gbagada as well as new schools are being completed. “There is a lot of progress in terms of capital works. And service efficiency is improving. Today, we are going to inaugurate our power plant in Alausa. We are going to hand over a primary healthcare centre in Oregun. These are the projects completed in the third quarters,” he said.