A Review of the Nigerian Energy Industry

Nigeria: As crude oil theft worsens – No money to share

Oil theft, oil thief24 September 2013, Abuja – The crisis arising from shortage of revenue to the Consolidated Revenue Fund (CRF), which led to a deadlock in the Federation Accounts Allocation Committee (FAAC) meeting last week, has deepened: there was still no money to share to the three tiers of government.

The FAAC meeting, which reconvened Monday after penultimate Friday’s failed attempt, could still not hold due to lack of funds in the federation account for distribution to the three tiers of governmenhttp://sweetcrudereports.com/wp-admin/post-new.php#t.

LEADERSHIP gathered that the finance commissioners were invited to the meeting only to be told by the accountant-general of the federation (AGF), Mr Jonah Otunla, who presided over the meeting, that there was still no money to share.

Besides allocation for the month of August, there are arrears of about N75 billion owed the three tiers between February and July, which are yet to be paid.

Ebonyi State commissioner of finance and chairman, Finance Commissioners’ Forum, Mr Timothy Odah, while reacting to the development said: “We told them not to invite us again until all issues are settled. Today by 8am the AGF called me that the minister asked him to preside. He said I should come with the commissioners. I made calls to some of them and we went to him. We are just coming back from him.”

Odah explained that the AGF appeared very confused as to why the minister of state for finance had convened the meeting when he knew that no money had been remitted into the federation account. “In fact, he (AGF) was more confused than anybody,” Odah stated. “He said he wants to let us know that there is no change. We asked him the need for the invitation and he said the minister asked him to invite us. AGF cannot give what he does not have, there is no improvement. The minister is nowhere to be found, the press is saying he travelled to Egypt. We wish him a successful journey.”

Odah said it would be the second time in the month of September that the FAAC session would end in a stalemate, adding that they were invited by the minister of state for finance but they have not seen him as “only the AGF addressed a few of our executives and told them nothing was available”.

Speaking on the issue, the coordinating minister for the economy and minister of finance, Dr Ngozi Okonjo-Iweala, said last week that the country was experiencing revenue shortfall because of the shortfall in oil production and revenues in other areas, adding that they were managing the process.

“We have experienced occasional revenue shortfalls. Even a person managing a household knows that, in a particular month, there could be cash crunch. School fees might come at a particular point or some other payments and you would feel squeezed at that time. But you know that you are still in a strong position to continue to manage your family. Just think of that analogy; that is where we are right now.”

According to her, the ultimate solution to the perennial revenue shortfall was to restore oil production, which she said the federal government was currently addressing with the setting up of a presidential committee headed by Governor Emmanuel Uduaghan of Delta State.

“The Ministry of Petroleum Resources has informed us that production has increased to 2.4 million barrels per day, but we have to sustain it. As you know, when production increases, the money does not come into the coffers immediately, because, by the time they sell, there is a lag. So we will receive those moneys in three months’ time. That has been the history. That will come into the coffers three months from now.”

She stated that the pipelines are usually shut once there is any theft or vandalism such that all the revenue that would be derived from there are lost even though not all the oil was stolen.

Concerning the FAAC she said; “what is in contention is that there is an outstanding of N75 billion which the governors are insisting must be paid. We are trying to find a solution to that.”

Odah, who represented other finance ministers, accused the minister of treating the states with contempt as the commissioners had at the end of the last meeting made it clear that they should not be re-invited until the situation improved.

“But right now, there is no improvement. We have imperative demands, augmentations and differentials in benchmark which we listed. We agreed that there would be no further augmentation in order to clear the backlog. But up until now, no augmentation, no clearing of the backlog. The worst effect of this is that it is having a retrospective effect on the states and local governments.

“To have called us without any improvements in our demands is a great slight and has shown that the minister does not brief the president. We know the president as a good leader with listening ears who would have attended to this problem immediately if he was aware, but it is like Ngama goes to tell him he would control us. The minster should be competent enough and show that level of competency. The minister is running FAAC as his own show,” Odah said.

Meanwhile, the federal government said it was making available the sum of N548.393 billion as the statutory revenue for the three tiers of government for the month of August

According to a statement by Charles Nwodo, deputy director, press, in the OAGF, this is an improvement over the figure of N497.984 billion made available at the Federation Accounts Allocation (FAAC) meeting in August.

Responding to the walkout by state commissioners of finance over an outstanding N75 billion expected from NNPC, the Office of the Accountant-General of the Federation disclosed that efforts were being made to resolve the outstanding issues.

The OAGF said FAAC has received assurances from NNPC that the issue is being dealt with dispatch and that a positive outcome is expected soon.

It also said that the government is exploring all avenues to end the shortfalls in revenue caused by oil theft and vandalism as soon as possible.

In a swift reaction to the purported disbursement or release of funds by the OAGF, Odah described the action as a sham since the FAAC did not meet to approve such disbursements.

He explained that the position of the state governments was that the payment of the N336 billion backlog due to states and local governments must be shared to them before further disbursements would be approved.

Odah said there was no meeting where the purported release of September revenues was agreed upon, describing the move by the OAGF as ultra vires since it contradicted the provisions of the law which set up the FAAC.

He hinted that, in addition to the N336 billion, there were other under-payments to the states and local governments which would be taken up at the National Economic Council meeting by the state governors very soon.

“The OAGF is just trying to help in a very bad situation and that is what the minister of state likes to do whenever there is a crisis. Remember, this was what happened when we staged a walkout from the meeting a few months ago. We have not received any money because the meeting where such disbursement would have been approved did not hold. So, what they are doing is not known to law. It is contrary to the provisions of the FAAC 1992. Our position remains unchanged. Let them pay the backlog of arrears after which we will meet to discuss on other issues on the federation accounts,” Odah said.

– Leadership

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