Monday, October 31, 2011

Governors, Jonathan for stormy talks on N250b cut

•Another FAAC meeting over Sept. allocation today

GOVERNORS are set for a crucial meeting with the President in Abuja over the September allocation to states, which they rejected. The meeting will hold on Wednesday.
The governors are insisting that the deductions from states’ allocations should be restored before they collect the cash.
“We will simply tell the President that it’s impossible for us to collect the allocations, unless they are fully paid,” a governor said at the weekend.
The meeting of the Federation Accounts Allocation Committee (FAAC), which broke up on October, will now hold today.
Finance Commissioners, who walked out on FAAC chair and Minister of State for Finance Alhaji Lawan Yerima Ngama have now returned to Abuja.
They rejected the sharing of the September allocation from the Federation Account, unless the N250 billion deducted to service fuel subsidy is returned.
There are signs that rather than thaw, the relationship between the Federal Government and the states may remain frosty.
Governors are kicking against the Sovereign Wealth Fund (SWF) and the allocation formula, which favours the Federal Government, even as it has less to do.
And now, there are moves to abolish the Joint State/Local Government Account.
The account is where local government funds are paid, which directly ties the local governments to the states. The governors have always expressed misgivings about the plan to scrap the account.
There is an on-going battle between the federal government and the states over the creation of a Sovereign Wealth Fund (SWF) and the review of revenue formula.
The states boycotted their September revenue allocation in protest over the deduction of N250 billion by the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Product Pricing Regulatory Agency (PPPRA).
Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) Elias Mbam said at the weekend that plans are afoot to scrap the Joint States/Local Government Account.
He spoke in Abakaliki, the Ebonyi State capital.
“The Commission is of the view that the Joint State/Local Government Account should be abolished. The local governments should be allocated funds directly to their accounts in order to reduce or forestall any possible abuse or leakages.
He said the measure will forestall any possible abuse of funds especially by state governments as allocations meant for local government areas would go directly to local government accounts without any interference from the state governments.
Section 162(6) of the Constitution states: “Each state shall maintain a special account to be called ‘State Joint Local Government Account’ into which shall be paid all allocations to the local government councils of the state from the Federation Account and from the government of the state”.
The RMAFC is the statutory body authorised to make proposals for revenue allocation from the Federation Account.
Mbam said in line with the wish of the governors, a new revenue allocation formula will be proposed soon.
“When I took office as the chairman, I addressed Nigerians on the need for a review of the revenue allocation formula and I promised Nigerians of our commitment to the review because it is long overdue. I went further to constitute a committee in that respect”.
“The Committee has commenced work. We are conscious of the sensitivity of the assignment. We will make sure we do detailed consultations, researches and that is why it is taking quite some time. I have promised the nation that the new revenue allocation formula will be ready for presentation to the President in the first quarter of 2012”.
He also said the Commission is working towards an amendment of the constitution which will provide RMAFC with the powers to monitor how the allocation is spent for the development of the states.
He urged state governments to work towards increasing their internally generated revenue instead of depending solely on allocation from the Federal Account. 
He said the Commission has started a process of sensitising the governors on the need for revenue diversification.
The RMAFC boss urged the governors to direct their finance commissioners to return for the Federal Accounts Allocation Committee (FAAC)’s meeting and collect the allocation which they rejected. He said the grey areas will be addressed in due course.
“I want to use this opportunity to call on governors to please direct their state commissioners of finance to attend the FAAC meeting and collect their allocation, while discussions on the issues of concern go on, because that will reduce the problem of distorting the governance and also heating up the polity,” he said.
Mbam assured that the new revenue allocation formula will be based on the constitutional parameters of land mass, population density, equality of states, among others.
The governors’ position on the SWF has been oscillating between rejection and acceptance.
The governors described the fund as unconstitutional and illegal, and revived their suit against it at the Supreme Court.
But Edo State Governor Adams Oshiomhole later dissociated his state for the suit. He said the explanation by Finance Minister Dr Ngozi Okonjo-Iweala convinced him of the need for the fund.
“The federal government will need to amend the Constitution to scrap the account. They may not be able to get the amendment through.
“Don’t forget that in addition to the two-thirds of votes at the National Assembly, they require the support from two-thirds of States Houses of Assembly, to amend any part of the Constitution. They may not be able to get this,” said a source close to one of the governor last night.