NEITI’s report reveals irregular conversion of special funds by govt

Ledum Mitee

Ledum Mitee, Chairman, National Stakeholders’ Working Group of NEITI

26 June 2014, Abuja – An independent audit of the Fiscal Allocation and Statutory Disbursement (FASD) of extractive revenues which accrued to Nigeria’s federation account between 2007 and 2011 has revealed that huge amounts of funds escrowed in special purpose accounts were converted to serve as cash pools for reasons different from their specific purposes by the federal government.

According to the audit, which was commissioned by the Nigerian Extractive Industries Transparency Initiative (NEITI), in line with the principles of the global Extractive Industries Transparency Initiative (EITI), which Nigeria is signatory to, the funds which were tampered with within the period include the Natural Resources Development Fund (NRDF), Ecological Fund Administration (ECA), Petroleum Technology Development Fund (PTDF) as well as a Stabilisation Fund set up for any economic downturn with regards to depletion in oil revenues.

The audit report, which was presented to the public yesterday in Abuja, was aimed at tracking the disbursements and applications of extractive revenues from the federation account to the three tiers of government and other government agencies, which directly receive allocations from the Federation Account.

Some of the agencies that were covered in the process include the Niger Delta Development Commission (NDDC), Petroleum Technology Development Fund (PTDF), Derivation and Ecological Fund, Excess Crude Account (ECA) as well as the Stabilisation Fund (SF).

It disclosed that the total extractive revenue that accrued to Nigeria from various sources within the period amounted to N30.09 trillion, out of which N23.7 trillion came from mineral revenues and N4.014 trillion from non-mineral revenues.

A breakdown of the revenue disbursement showed that N22.35 trillion was distributed to the federal, states, local governments and beneficiaries of the 13 per cent derivation during the period in the order of N9.77 trillion in 2007, N5.42 trillion in 2008, N4.28 trillion in 2009 and N2.80 trillion in 2010.

Revenues to states as captured by the audit indicated that the nine pilot states used are: Akwa Ibom, Bayelsa, Delta, Gombe, Imo, Kano, Nassarawa, Ondo and Rivers which got about N8.22 trillion from the federation’s mineral revenue.

However, the Chairman of the National Stakeholders’ Working Group (NSWG) of NEITI, Ledum Mitee who presented the report, stated that within the period under review, allocations to DNRF, Ecological Fund and Stabilisation Fund were converted to other uses outside of the purposes for which they were set up.
For example, Mitee explained that the report findings showed that between 2007 and 2011 the NRDF received a total allocation of N365 billion but “contrary to the objectives for which the fund was set up, it had become a loose fund available for government to borrow to meet other obligations.”

“These include funding budget deficits, fertiliser and agriculture among others. Under this circumstance, there is an outstanding debt of N339 billion due from the federal government based on withdrawals so far made,” he stated.

He noted that the Stabilisation Fund, which was set up to serve as a stabilising factor on the federation revenues from any economic downturn arising from depletion in oil revenue, received total transfers of N110 billion within the period under review.

Mitee, however stated that findings from the audit showed that contrary to the objectives for which the fund was established, “the fund has over the years become a pool to grant loan to fund various expenditure such as car loans to Ministries, Departments and Agencies (MDAs), to the tune of N13 billion.”
He further disclosed that an additional N34 billion was taken from this fund to grant loans to six oil producing states out of which the beneficiaries are yet to repay N28 billion to the fund.

Also from the fund, the sum of N87 billion was disbursed to the Independent National Electoral Commission (INEC) for registration of voters, while the government also granted loans amounting to N6 billion to Ghana, Sao-Tome and Principe in 2004 from the fund; these benefitting countries are yet to repay the sum of N827.58 million of the loan as at the end of December 2011.

In the same vein, the report disclosed that while the share of Derivation and Ecological Fund stood at N164 billion during the period 2007 to 2011, receipts from Excess Crude Account (ECA) stood at N53 billion, “disbursement from the fund were made to beneficiaries outside the purpose for which the fund was set up.”

Also, out of the N109.76 billion collected by government as Signature Bonuses within the period under review, the PTDF, which should be credited with all Signature Bonuses, according to its establishment Act, received only N77.87 billion, leaving a deficit of N31.8 billion owed to it.

While recommending a comprehensive audit of the ECA, the report stated that, “efforts to adequately examine the administration of the ECA proved futile due to the non-provision of documentation by the Office of the Accountant General of the Federation (OAGF) and the Central Bank of Nigeria (CBN).”

According to the report, total transfers to the ECA between 2007 and 2011 stood at N8.53 trillion with the highest transfer of N3.15 trillion recorded in 2011 and lowest of N339.54 billion recorded in 2009.

On the revenue allocation to state offices of the NDDC, the report stated that while the nine states of the NDDC received a total of N7.44 billion for the completion of projects, findings however showed that “most of the projects were neither identifiable nor scheduled for monitoring and proper management.

It added that the NDDC’s enabling Act had remained silent on the issue of how the budgets of the oil producing states were obtained by the commission.


– This Day

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