18 November 2016, Sweetcrude, Abuja – The Nigerian Government will probe the abuse and excesses of revenue generating bodies, which, according to the government, have been ongoing for a decade.
This was one of the decisions reached at the end of the National Economic Council (NEC) meeting presided over by Vice President Yemi Osinbajo at the Presidential Villa, Abuja.
Briefing State House correspondents, Anambra State governor, Mr. Willy Obiano, who was accompanied by his Bauchi counterpart, Mohammed Abubakar and the Minister of State for Petroleum, Dr. Ibe Kachikwu, said the vice president informed the council that the government is paying keen attention to the issue of abuses and excesses of certain revenue generating agencies (RGAs).
According to him, the Minister of Finance, Mrs. Kemi Adeosun briefed the council on certain activities of some RGAs that amount to financial abuses of the revenue they generate which were supposed to have been remitted to the Federation Account, but diverted through several illegal means and ploys.
He listed the abuses to include “paying salaries above specifications of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), converting official cars to personal ownership under 48 hours of purchase.
“Inappropriate and arbitrary monetisation of medical allowances, undue and excessive overseas travels, lavish training allowances and conference spending, excessive and personal loan approvals, including unapproved mortgages, among others.”
He said the Ministry of Finance and RMFAC were working together to rein in these abuses as the affected agencies raise as much as N1.5 trillion yearly, and spend almost 90 percent of it on recurrent expenditure in clear violation of due process and the constitution.
“The minister added that these financial abuses have been going on for a decade, whereby the agencies hide revenues that ought to go into the Federation Account, but she assured Council that such activities will now be exposed and terminated as directed by the president,” Obiano said.
On complaints by some governors that they were short-changed during the sharing of Ecological Funds in the last regime, Obiano admitted that governors brought up the issue of the alleged N2 billion paid to some states by the last administration under unclear circumstances and criteria.
“There were complaints that state governments did not have equal access to the Fund amid allegations of political preferences.
“Vice President Osinbajo assured the Council that the matter would be properly investigated, broadly reviewed, and forthright counsel would be made to the president regarding the matter,” he said.
On his part, Kachikwu said NEC endorsed a new funding regime for the oil and gas industry, eliminating the often arduous cash call regime which has dragged down the industry in about a decade, stalling growth.
The minister said an alternative funding stream had been approved earlier this week at the Federal Executive Council (FEC) meeting on Wednesday and then presented yesterday to NEC, as the body mandated to come up with “measures necessary for the coordination of the economic planning efforts or economic programmes of the various governments of the federation.”
Kachikwu also noted that while the NNPC pays the entire Oil and Gas revenues realised from the JV operations into the Federation Account, the production costs are appropriated, calendarised and paid monthly as cash calls to the JV operations from the NNPC and international oil companies (IOCs).
According to the minister, January-November 2016 underfunding of the NNPC Cash Calls is estimated at $2.3 billion. This is in addition to the inherited arrears estimated at $6.8 billion for year ending 2015.
He, however, disclosed that through negotiations, the $6.8 billion past due cash calls burden on the federation had now been reduced to $5.1 billion, which would be paid based on an improved oil production output.
Under the new funding stream, the JVs would become incorporated and source for their own financing, freeing up the federal government from the budgetary obligations of coming up with the cash calls already put at $2.3 billion so far this year alone.
Under the alternative funding regime, the technical cost of oil production in the country would also come down from about $27 to $18 per barrel.
The new arrangement, he assured, would drive up investment in the oil and gas sector while also boosting production output and revenue significantly.
For instance, net payment from oil production to the Federation Account is expected to peak under the new arrangement to about $18 billion by year 2020 while raising output to 3 million barrels per day.
On his part, the governor of Bauchi State said the council received a presentation from the Ministry of Industry, Trade and Investment and relevant agencies on ‘Energizing the MSMEs Sector as a Major Economic Growth Drive.’
The Ministry informed the Council that the total estimated number of MSMEs in Nigeria is 37,067,416 and their contributions to employment is 84.02%, 48.47% to GDP, and 7.27% to export.
Of the total number, micro enterprises account for the majority (99.8%) of the MSMEs in Nigeria, with 36,994,578 enterprises, 68,168 small enterprises and 4,670 medium enterprises.
According to the presentation, Lagos State has the highest number of micro enterprises (3,224,324), followed by Oyo and Kano States (1,864,054 and 1,794,358 respectively) while Nasarawa State has the least (226).
He also said the CBN governor, Godwin Emefiele, made a related presentation to the Council on financing opportunities critical for MSMEs development.
According to him, the governor reported that the reason for the CBN’s involvement in MSMEs is to increase lending, provide access to affordable credit facility, and diversify the country’s economic base, create jobs and improve microeconomic stability.