Wednesday, October 19, 2011

States, FG at war over allocation

The 36 states of the federation and the federal capital territory have rejected the September allocation from the federation account as a result of illegal deductions from states by the federal government and the un-remitted funds from NNPC into the federation account.
This is coming on the heels of Edo State Governor Comrade Adams Oshiomhole’s challenge to the federal government to publish the names of companies and individuals benefitting from the oil subsidy, saying it was not enough for the federal government to say that the subsidy is not reaching the people.
Also yesterday the federal government said it has reversed downward the 2012 budget oil bench mark from $75 per barrel to $70. It also disclosed commencement of the controversial Sovereign Investment Authority, NSIA, to manage the Sovereign Wealth Fund , SWF, implementation naming KPMG auditing firm as the manager of the wealth fund indicating that the Governors Forum that was opposed to the wealth fund has finally given it the green light to take off.
The implication is that the estimate of the 2012 budget will drop slightly and the deficit may rise beyond what government had initially projected. This means also that the falling crude oil prices in the international market have taken a toll on the nation’s 2012 budget still in the works.
States reject allocation
The lingering face-off between State governments and the Nigerian National Petroleum Corporation, NNPC, over illegal deductions and unremitted funds deepened yesterday as the Federation Accounts Allocation Committee (FAAC) again failed to distribute monthly allocation to the three tiers of government. The rejection is against the backdrop of controversies occasioned by controversial N450 billion still owed FAAC by oil giants, new deductions reared their ugly heads at the FAAC technical session to dash states’ hopes of smiling home with their allocations for the month of September 2011.
For the second successive month, hours of rigorous deliberations by the technical committee failed to yield results as the States’ Commissioners of Finance engaged in a showdown with the Minister of State for Finance and Chairman of FAAC, Alhaji Yerima Lawal Ngama at the monthly meeting held at Abuja Sheraton Hotel and Towers.

Those present at the heated meeting said that the bone of contention was the sum of N250billion deducted by the NNPC and the Petroleum Products Pricing Regulatory Agency (PPPRA) from the September federation accounts revenue in the name of subsidies for petroleum products.
According to the source, the Minister, who got wind that the commissioners had concluded plans to embarrass him by staging a walk-out, stayed away from the venue, thereby causing an indefinite postponement of the meeting.
The source said the N100 billion deducted by NNPC and the 150 billion deducted by PPPRA were not only illegal but criminal in nature given that they run foul of existing laws governing the federation account. “We don’t want to be part of the continued violation of the law. Things must be done right and that is why we insist that the money illegally deducted from our commonwealth must be returned to the treasury before we can resume discussions,” he stated. Earlier, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okojo-Iweala had explained that unresolved issues by the FAAC technical committee were responsible for the deadlock.
She, however, promised all the knotty issues would be fully addressed with the FAAC expected to reconvene soon for the distribution of the September allocation to the three tiers of government.
Oshiomhole challenges FG to publish list of subsidy beneficiaries
Speaking at the 41st Annual Conference of the Institute of Chartered Accountants of Nigeria, ICAAN, in Abuja, yesterday, Governor Oshiomhole said that it was not enough for the federal government to tell Nigerians that the subsidy had to be removed for failing to reach the poor but that the cabal behind it should be exposed in the national interest.
He said that Nigerians must be told how the federal government arrived at the figure of N1.4 trillion spent on subsidy in the past nine months, saying, “the figure is crazy even if all Nigerians are drinking petrol the way we drink pure water. How many litres do we consume? Who is taking what? Let the federal government publish the names of the companies benefiting from it and the names of their directors”.
On the Sovereign Wealth Fund, SWF, the governor said that he and his colleagues were not against savings, as according to him, “no one is opposed to savings. The argument about savings is a matter of common sense”, but that the revenue sharing formula needed to be reviewed in favour of the two lower tiers of government.
Amaechi supports subsidy removal
Also speaking, Gov Chibuike Amaechi of Rivers State said that there was too much lack of transparency and arbitrariness in the Nigerian oil industry and opined that there was need for a complete reform of the sector. “What about the corruption in the oil industry?. They need to tell me why there is so much arbitrariness in the oil industry”, he said.
He however, said that Nigerians should allow the government to remove the subsidy in order to create room for openness and a pool of funds to undertake massive investments in infrastructure. According to him, the government should come up with measurable palliative measures and milestones to be achieved within given periods of time, failure of which ordinary Nigerians should march to the streets. “Hold the president and the governors responsible. If they don’t deliver on their promises come out to the streets”, he said.
Major oil marketers support subsidy removal too
Major Oil marketers in the country have thrown their weight behind the federal government’s decision to remove subsidy in 2012. Deputy Managing Director of Oando Plc, Mr. Mofe Boyo who spoke with Vanguard exclusively on phone stated that in spite of all the moves against the federal government’s intention by different groups and individuals the move by government remains the only way to grow the economy.
According to him, the oil marketers are not the proponents of subsidy removal but would adjust accordingly if the federal government so decided. “Moman’s (Major Oil Marketers Association of Nigeria) position has always been clear; there can be no major investments in the downstream sub-sector under a regulated regime. If government finally decides to remove subsidy and allow market forces take price control then people can take prompt investment decisions. But as I earlier mentioned Moman is positioned to react to government’s decision if they decide to deregulate and if they decide not to deregulate due to the pressures, well that’s where we are already.”
On crude bench mark price
On the oil bench mark price for 2012 budget Dr Okonjo Iweala said: “We took the decision after consultations with experts in the country and even outside the country on the volatility of the oil price. There is a convergence of opinion that there may be no end to the volatility very soon.
We are convinced that it is better to reduce the benchmark from $75 per barrel to $70 to make room for prudent management of the resources”, she said. She stressed the commitment of the Goodluck Jonathan administration to the transformation of the nation’s economy by prioritizing sectors such as power, agriculture, roads/rails, education, education and security through which to generate massive jobs for Nigerians.
Meanwhile, at a separate press briefing, Dr. Okonjo-Iweala announced the commencement of the implementation of the SWF for which KPMG firm has been appointed to undertake head-hunt for its Managing Director, MD and two Executive Directors. According to her, “we are proceeding with the implementation of this very important programme following consultations with the Governors’ Forum because the feedback we have is that Nigerians strongly support saving for the future and the other core objectives of the fund. It is also clear that given the current challenges facing our economy and the global financial crisis, we cannot afford to waste any time”. Consequently, the minister announced that $1 billion out of the $6 billion currently held in the Excess Crude Account would be drawn down as initial take-off fund for the authority.
What to do with the balance, she said would be determined later, based on the outcome of further consultations with the governors.
Nigerians should think outside the box — ICAN President
Earlier, the President of ICAN, Prof Francis Ojaide said that although the proposed transformation agenda for the economy could cause initial pain, his organisation would support it, having been convinced of its future benefits.
His words: “By its very nature, transformation is often followed by temporary pains, discomfort and even disorder which humans detest. Indeed, history attests to the fact that except people abandon their comfort zones, desire a higher order need, progress will not be achieved easily.
“As a people, as discerning professionals and players in the economy, we need to see through current temporary obstacles and symptoms of dislocation, grab the opportunities for wealth creation which they offer in order to achieve corporate success, sustainable growth and launch into national prosperity. It is ironical that while Nigerians are complaining about current economic difficulties, Asians, Lebanese and Indians are coming into Nigeria in droves to take advantage of the huge opportunities that exist here. We need to think outside the box”.