Among the multiple issues to set the Presidency and the National Assembly on a collision course is the House of Representatives' ongoing attempts to audit the opaque Federation Account, TORDUE SALEM writes.
Revenue accruing to the Federation Account, by design is supposed to be shared by the local, state and federal government.
But because the local governments have been treated as an auxiliary arm to states, the federation's purse has been basically shared by the federal and state governments.
This situation has not only contributed to the weakening of the third tier, it has sparked inter-tier conflicts, between the federal and state governments, arising from cases of short-changing and outright abuse of power by the Federal Government.
Section 162(1) of the 1999 Constitution as amended, states that: The Federation shall maintain a Special Account to be called "the Federation Account" into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the federation, the Nigeria Police Force, the Ministry or Department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory Abuja."
So, in the light of this provision, the House of Representatives last Thursday demanded a full disclosure of the Federation Account from the Presidency. The House seeks the disclosure in the face of the economic situation of the country. The sponsor of the motion for the disclosure, Hon. Bimbo Daramola (APC- -Ekiti) said he was worried by the lack of information relating to the actual amount of money in the Federation Account.
He alleged that contrary to the provision of section 162(1) of the 1999 Constitution, the Executive, charged with the management of the purse, was operating multiple accounts.
Daramola stressed that section 162(3) stipulates that any amount standing to the credit of Federation Account shall be distributed among the federal, state and local governments on such terms and manner as prescribed by the National Assembly. He recalled that the benchmark in the 2013 appropriation was $79 per barrel, and according to him, to date oil sales have not fallen below $100 per barrel.
He, however, wondered why in the past three to four months, there has been inter-tier bickering over partial release of the amounts due to the states. According to Daramola, "some state governments are already unable to meet their statutory responsibilities such as payment of salaries, thereby inflicting pains on the people and that despite profuse reassurance from the Minister of Finance, Dr. Ngozi Okonjo-Iweala that the economy is growing and the government is meeting all its obligations as at when due."
The House in its resolution mandated the Committees on Finance, Appropriation, Loans and Aids to conduct a one-day public hearing where the Minister of Finance, Heads of Revenue Agencies, DMO and related organisations would appear and present to Nigerians the full status of the state of account of the country.
Speaking in favour of the motion, some members of the House queried the rational behind the Finance Ministry's withholding the states' share in the Federation Account.
Orker Jev (APC-Benue) posed a rhetorical question that "if we say that the economy is growing, how come most states cannot pay their salaries and capital projects are not completed?" Hon. Ibrahim Shehu (APC-Zamfara) said he was suspicious that the Presidency has full knowledge of the oil thieves and may be behind oil theft which is a contributing factor to the cash crunch presently bedevilling the federation account.
According to him, the Federal Inland Revenue Service, FIRS, has remitted over N3 trillion into the Federation Account and Customs has also remitted trillions into the same account, which must be accounted for.
Many members of the House also questioned the motive behind the maintenance of the Excess Crude Account, ECA, after the establishment of the Sovereign Wealth Fund, SWF. The ECA is a federation account that was established by fiat to save oil revenues above a base amount derived from a defined benchmark price.
The ECA established in 2004 by the administration of Olusegun Obasanjo with the advice of Okonjo-Iweala, who was also Finance Minister at that time, has as its primary objective to protect planned budgets against shortfalls due to volatile crude oil prices. By separating government expenditures from oil revenues, the ECA aims to protect the Nigerian economy from "external shocks".
According to Investopedia, "Skyrocketing crude oil prices led to the Ex-cess Crude Account increasing almost four-fold, from $5.1 billion in 2005 to over $20 billion by November 2008, accounting for more than one-third of Nigeria's external reserves at that time. By June 2010, the account had fallen to less than $4 billion due to budget deficits at all levels of government in Nigeria and the steep drop in oil prices."
In 2010, Nigeria's National Economic Council approved a plan to replace the ECA with a national SWF. But the federal and state governments continue to maintain and share from the account. The House of Representatives had earlier this year, raised an investigative panel over alleged theft of 150,000 and 200,000 barrels of crude oil daily.
The House mandated the Committees on Petroleum Resources (upstream) and the Navy to investigate activities of illegal bunkerers, but the exercise came to an abrupt end because of threats on the lives of the lawmakers from militants, and the panel is yet to submit its report after more than earlier months.
Earlier in 2011, the House also discovered that the Nigeria National Petroleum Corporation, NNPC, illegally deducted N553.9 billion from oil proceeds between January and September in 2011.
Testifying before the Joint committee on Finance, Petroleum Upstream, Downstream and Gas Resources of the House probing the non-remittance of N450 billion into the Federation Account by the NNPC, Chairman of Revenue Mobilization Allocation and Fiscal Commission, RMAFC, Elias Mbam, accused the NNPC of running secret accounts.
Apart from the NNPC, Mbam revealed that the Petroleum Products Pricing and Regulatory Agency, PPPRA, was equally guilty of illegal deductions in the same period to the tune of N544.907 billion as subsidy.
The illegal deductions, according to him, contravened the 2011 Budget, which allows NNPC to deduct only N81.72 billion and PPPRA should have paid N102.753 billion as subsidy to marketers.
RMAFC also disclosed that signature bonus from concession granted on oil blocks to develop the oil and gas sector that should be paid into the Federation Account was being held by the NNPC. Members were also shocked to know that dividends from the Nigerian Liquefied Natural Gas, NLNG, have not been paid into the Federation Account by NNPC since 2004. The RMAFC boss lamented that the operation of the NNPC accounts are not open to stakeholders, resulting in lack of information and accountability.
"The operation of NNPC's domestic crude oil and gas account does not promote transparency and accountability. Indeed, NNPC pays revenue from its domestic crude oil and gas into its operation accounts and subsequently directs Central Bank of Nigeria to transfer specific amounts to the Federation Account. "At present, the J.P Morgan Account, where the payment for exported crude oil and gas is paid are not largely being supervised and constitutionally monitored by the major stakeholders of the Federation Account, particularly, RMAFC.
"This situation makes the operation of the account to be shrouded in secrecy and therefore, subject of several criticisms, suspicion and lack of confidence by all stakeholders," he said.
The commission testified before the House that it was wrong to pay proceeds from the export of crude oil and gas lifted directly to J.P Morgan account, instead of the Federation Account. Mbam told the panel that NNPC had paid N15,234,862,500 in two instalments back into the Federation Account from the outstanding N459,776,350,456.99.
On the probe of oil theft, the committees are also to identify owners of illegal vessels operating in the territorial waters, the status of impounded bunkering vessels and barges, international clients of illegal crude oil and the alleged failure of the Nigerian Navy to stop the activities of the bunkerers. Hon. Daniel Reyenieju (PDP-Delta State), who brought the activities of oil thieves on the floor in a motion, lamented that bunkerers were causing harm to government installations and loss of revenue through their constant vandalism and theft of hundreds of thousands of barrels of crude oil.
The Chairman of the Committee on Inter-Parliamentary Affairs stated that the method of operations of oil bunkerers leave damages that cause environmental degradation and affect the aquatic eco-system of the areas. The lawmaker lamented that the oil theft menace has forced global oil companies to shut down operations because of recurring losses incurred due to the vandalism of their facilities.
"There is a an unprecedented upsurge of illegal bunkering activities within the Nigerian coastal region, resulting in the daily threat of vandalism of oil pipelines and other facilities and general state of insecurity in the country.
"The International Oil Company exploration and exploitation activities at Imo Rivers field, straddles Abia and Rivers states is being forced to shut down its activities because of the apprehension and encroachment of bunkerers into their oil facilities which has five flow stations, a gas compressor station," Reyenieju said.
The Federation Account which is also shared by the National Assembly has been a long victim of greed, poor management and corruption in government. But by virtue of sections 162 and 80 of the 1999 Constitution, the National Assembly can reverse the trend if it takes its oversight function more seriously.