States groan as revenue allocation hangs

2012-04-11
THE PUNCH Newspaper

STATE governments on Tuesday expressed anger at the delay in receiving their allocations from the national treasury which is said to be short of funds.

The national treasury is said to be empty as a result of the alleged failure of the Nigerian National Petroleum Corporation to remit oil earnings in March into the Federation Account.

Consequently, the scheduled meeting of the Federal Account Allocation Committee has been shifted from the initial April 12 and 13 date to April 19 and 20 to give the NNPC enough time to fund the treasury.

Besides the non-remittance of the March earnings, the corporation has a carry-over of N203bn indebtedness to the Federation Account from 2011.

But the state governments on Tuesday said the delay in receiving their allocations was hampering progress in their states.

Ekiti State Governor, Kayode Fayemi, told one of our correspondents that “the incessant postponement of federal allocation meetings is affecting the funding of states’ projects.”

The Commissioner for Information in the state, Mr. Funminiyi Afuye, who spoke on behalf of the governor, told one of our correspondents, “This is just a strand of the numerous fiscal illegalities that has characterised the operation of the Nigerian state. Rather than allow the states to take charge of their resources, the Federal Government is feasting on the commonwealth of the people and not having anything to show for it.

“The states are, therefore, at the mercy of the Federal Government with the attendant slow down in their (states) pace of development. Imagine the deliberate refusal to distinguish between the Accountant-General of the Federation and that of the Federal Government.

“There lies the short-changing of the states in revenue accruals. This is one of the issues the governors have been fighting. The revenue profile of Nigeria is not arranged to favour the states.”

The Osun State Commissioner for Finance, Budget Planning and Implementation, Mr. Wale Bolorunduro, wondered why the NNPC was delaying remittance of oil revenue to FAAC since crude oil sales in the international market were on prepaid basis.

“The delay has been going on since last year. We just collected February allocation,” Bolorunduro said.

The commissioner also confirmed that states’ monthly allocations were being paid twice.

He said, “They now even pay half sometimes and pay up the other half at the next meeting.

“Oil sale in the international market is not a spot thing, meaning that buyers pay money for oil to be prospected for, say, 90 days. It is not that you pay on the spot.”

In Rivers State, the Commissioner for Finance, Dr. Chamberlain Peterside, said the late release of federal allocation was also affecting the execution of major projects in the state.

The state governor, who is also the chairman of the Nigeria Governors’ Forum, Rotimi Amaechi, had earlier told newsmen in Port Harcourt that waiting for the monthly federal allocations could delay the completion of some projects in the state.

Chief Press Secretary to Governor Sullivan Chime of Enugu State, Mr. Chukwudi Achife, rued the delay in the allocation to states and said that Enugu State could not survive on Internally-Generated Revenue alone.

To stave off grounding of governance in the states, however, the officials said they had stepped up the IGR drive.

Fayemi said Ekiti was finding other means of ensuring that the administration did not fail in delivering on its promises to the people.

Bolorunduro said as a result of the shortfall in the federal allocation, Osun State had improved the state Internally Generated Revenue from N300m to N600m in less than10 months of the Governor Rauf Aregbesola’s administration.

“We did not tax our people; all we did was to block all IGR loopholes by making our payment to be online,” he said.

Peterside explained that the irregular payment of the federal allocation was not adversely affecting the state as it had fallen back on its IGR.

The commissioner said the state generated N7 bn every month.

Achife however said, “The government discovered early that the IGR would never in any way bail us out whenever things get bad, that was why it resulted to saving and prudent management of funds.”

The PUNCH learnt that the national treasury had become empty due to the NNPC’s indebtedness.

But the NNPC on Tuesday denied being the cause of the delay in FAAC meeting.

The NNPC’s Group General Manager Public Affairs, Dr. Levi Ajuonuma, reacting to The PUNCH enquiries on the matter, said, “The NNPC has been paying well ahead in the past two months. We are not delaying FAAC meeting. It is the Accountant-General of the Federation that postponed the meeting because of the public holidays. It does not have anything to do with the NNPC.”

But a text message circulated to states’ commissioners of finance confirmed that the delay in holding FAAC meeting was due to NNPC’s failure to remit funds to the Federation Account.

The commissioners are statutory members of FAAC.

A text message from the Chairman, Forum of Commissioners of Finance, Mr. Eze Echesi, to his colleagues reads, “Dear colleagues, please note important information. The April FAAC initially slated for 12th and 13th April will certainly not hold following discussions with the secretariat.

“A new date will be advised soon but it will be either April 16th or 17th which are Monday and Tuesday or 19th and 20th being Thursday and Friday of April subsequently.

“As usual, NNPC is not ready and the funds are not yet available. All inconveniences (are) regretted.”

Apart from the alleged failure of the NNPC to fund the treasury in March, the corporation currently owes the federation account N203bn unremitted revenue.

The amount is the balance of the controversial N450bn unremitted oil proceeds which had been a bone of contention between the NNPC and members of the FAAC for over two years.

The corporation had in 2011 refused to remit the N450bn, claiming that it was the Federal Government that owed it unpaid subsidies.

But after much pressure from the committee, the corporation on November 2 last year agreed that since it was also being owed by the Federal Government, it would only repay the portion that belonged to the states and local governments, which amounted to N250bn.

It was learnt that the corporation had only paid N45.7bn out of the N250bn.

The Federal Government has been recording a significant drop in oil revenue since the beginning of the 2012 fiscal year.

For instance, in January, it recorded a significant drop of N226.38bn, earning N666.32bn compared to the N892.70bn in December 2011.

The Minister of State for Finance, Dr. Yerima Ngama, who is also the Chairman of FAAC, had attributed the huge decline in revenue to production hiccups experienced in the major oil production centres.

Ngama had explained that there was a drop in crude oil lifting as a result of production shut down at Bonga Terminal; drop in production at Qua Iboe Terminal and also downward review of estimates by oil producing companies.

Similarly, he said the decrease in Production Sharing Contracts, Modified Carry Agreement as well as the one week strike embarked upon by organised labour to protest the removal of fuel subsidy all accounted for the huge decline in oil revenue.

Meanwhile, Ngama, who is supposed to chair the postponed April 1 FAAC meeting, is said to be out of the country, attending a conference of the Islamic Development Bank.

 

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