SATURDAY ESSAY: Interrogating the NLNG, FIRS and the ECA – by Bolaji Aluko

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SATURDAY ESSAY: Interrogating the NLNG, FIRS and the ECA

 

 

By

 

Mobolaji E. Aluko, PhD

alukome@gmail.com

 

Saturday, July 25, 2015

 

 


 

 

 

 

SYNOPSIS

 

 

QUOTE from my essay below:

 

I wanted to find out two things:  how much FIRS has made over the years, how much of that total has been paid into the Federation Account.

 

These two pieces of information are given in Tables 1 – 3 computed from information available on FIRS’s website, which show that from January 2011 to June 2015, the FIRS collected a total of about N21 trillion, of which almost 58%  (N12 trillion) was PPT and 42% (N9 trillion) non-oil taxes.  Of the collected total, N16 trillion (or 75%) should have been paid to the Federation Account, the rest into Special or other Independent Accounts. Judging from the fact that the total FEDERAL BUDGET from 2011 to 2015 is N23.83 trillion (see Table 4), this means that FIRS intake alone would have been able to fund almost 90% of that budget!

 

UNQUOTE

 

 

QUOTE from my essay below:

 

If money is determined destined to go into FA or VAT Pool, then it can be distributed according to the specified formula WITHOUT further or new National Assembly approval. Put in another way, if it is distributed according to the indicated formula then it does not need new National Assembly approval – prior approval of formula is adequate.  That is the spirit in which the recent NLNG+Shell tax payment distribution of $2.1 billion did not require new NA approval.  However, ANY other method or formula of distribution – or block use of the money – would be illegal WITHOUT new NA approval.  In this case, the “bailout” is really not one, rather it can be considered an early emergency (and remote) FAAC meeting sharing of money.  This calls into question whether face-to-face monthly FAAC meetings are really necessary, if there is trust between all parties. Eschewing such monthly meetings in Abuja – and ensuring electronic transfers to state, local and federal government accounts – will save the country a lot of travel and per diem money. On the other hand, if as claimed in some quarters that the NLNG is considered an investment of the Federal Government rather than of the Federation, then the DIVIDEND arising from that would be considered an INDEPENDENT revenue of the FGN, and would go straight to the Federal Budget (rather than to the FA), and hence should not be shared by the other two tiers of government without National Assembly approval.  In that case, any sharing of NLNG dividend could be considered a “bailout” awaiting NA approval.

 

UNQUOTE

 

 

PROLOGUE – A TEASER ON A WAIVER

 

I call your attention to Figure 1, whose full text I repeat here:

 

QUOTE

 

News: NLNG Management Visits FIRS…..seeks tax waver (sic)

           – by Aghede Ayorinde

 

 

In an effort to clear out its outstanding tax debt, the Management of the Nigerian Liquefied Natural Gas paid a courtesy visit to the Service on Monday 14th May 2012.  The NLNG delegation led by its Managing Director Mr. Babs Omotowa was received by the AG ECFIFRS, Alhaji Kabir Mashi and other Management staff.

 

The meeting, as revealed by Omotowa, was aimed at helping the NLNG fine-tune its tax processes and ensure proactive measures in tax payment.  He stated that the NLNG which was created in 1989 to harness Nigeria’s vast natural gas resources, produces and exports on the aver (sic) 150,000 metric tons of liquefied gas daily.

 

The MD/NLNG disclosed that since 2007, NLNG tax remittance is valued at $760,000,000, but recent tax audit challenges have slowed down the company’s commitment towards tax remittance.  It is in the light of this that he said “We have an outstanding tax liability of $272,000,000 on VAT and we are prepared to resolve this area as soon as possible and we are requesting FIRS’ assistance to get a waiver for the outstanding.”

 

Responding, the Ag. ECFIRS thanked the NLNG delegation for the visit and recognized them as partner in progress. Alhaji Mashi encouraged them to formally present their requests to enable Management make objective and informed decision.

 

The meeting also addressed areas of policies to be adopted in improving the shortage of domestic gas supply in the country.  The top hierarchy of both organizations also considered the role of Ministry of Petroleum Resources in creating measures that will aid proper distribution of cooking gas to the end users to guide (sic) against incessant increase of prices.     

 

  – FIRS Staff News Bulletin, (A Publication of Communications and Liaison Department), May 2012, Vol. 2

 

UNQUOTE

 

Interesting request for waiver…but we get ahead of ourselves.

 

 

ABOUT FIRS, NLNG AND TAXES

 

Three important revenue-collecting agencies in Nigeria are the Nigerian Ports Authorities NPA (http://www.nigerianports.org/) , which collects revenue at our six sea ports (Lagos, Tin Can,  Delta, Rivers, Calabar, Onne) ; the Nigerian Customs Services NCS (https://www.customs.gov.ng/) , which collects taxes at our land (non-sea) borders ; and the Federal Inland Revenue Services FIRS (http://www.firs.gov.ng/) , which collects taxes everywhere else. In fact, the FIRS collects nine different taxes: (1) Companies Income Tax (CIT); (2) Petroleum Profits Tax (PPT); (3) Value Added Tax (VAT); (4) Personal Income Tax (PIT); (5) Witholding Tax (WHT); (6) Education Tax (EDT); (7) Stamp Duties (STD); (8) Capital Gains Tax (CGT); and (9) National Information Technology Development Fund (NITDEV) Levy.  NCS is statutorily allowed to pocket 7% of what it collects, and FIRS 4%  – both as costs of collection.

 

NLNG, being a Nigeria-owned and Nigeria-registered company in the petroleum business, from the FIRS stipulations, one expects that it was required to file at least four of these taxes: PPT, VAT, WHT and EDT, with the last being specified to be paid at the same time and place as 2% of the assessable PPT (same specification for CIT) under the Tertiary Education Trust Fund Act (2011) as amended.  However, recent news about tax payments by NLNG (and Shell) spell them out as having paid CIT – which is rather confusing until that ambiguity is cleared up.

 

In fact, the mode and payment of the PPT (but not CIT)  is a circuitous one:  according to FIRS’s website, all affected Companies first make offshore payments to JP Morgan Chase Bankthen the bank advises the Central Bank of Nigeria to enable the bank credit FIRS accordingly.  The request for tax waiver by NLNG and statutory involvement of JP Morgan raises an eyebrow, when we recall reading from both the All Progressives Congress APC  and the Peoples Democratic Party PDP and recently about recent taxes paid by NLNG:

 

 

Press Release from APC (inter alia) July 12, 2015

QUOTE

 

”Well, we can tell Nigerians that the $2.1 billion was sourced from the $1.6 billion Company Income Tax/Education Tax (that NLNG) paid to the FG on June 17th 2015, over two weeks after the Jonathan Administration left office, as well as the $500 million tax paid by Shell. We can tell Nigerians that this is the first time the payment of the Income Tax/Education Tax by the NLNG was being disclosed by any government, in addition to paying it into the Federation Account for sharing, hence those who call it their ‘legitimate’ earnings should be asked why they did not demand the sharing of such ‘legitimate’ earnings in the past…….We can tell Nigerians that apart from the said $1.6 billion NLNG payment for 2015, NLNG also paid $1.4 billion as Income Tax/EducationTax in May 2014, paid $0.3 billion as Education tax to the FG in 2011, 2012 and 2013 and $1.2 billion in VAT and With-holding Tax to the FG since 2009. These payments are just those made in the past six years alone, hence there were other payments before then……In addition, dividend payments totalling $4,728,136,946 was paid to the FG between 2004 and 2009, out of which only $127,851,348.19 was credited to the FG’s Independent Account with JP Morgan, leaving a balance of over $4 billion. The questions to ask therefore are why all the past taxes and dividends were neither fully paid into the Federation Account nor shared by the three tiers of government and what happened to the funds,” it said.

 

UNQUOTE

 

Press Release from PDP (inter-alia) July 21, 2015

 

QUOTE

 

Our attention has been drawn to the misleading and outright falsehood by the APC.

 

The truth is that the NLNG had been on a 10-year tax haven until 2014.  Within this period, successive governments, right from President Olusegun Obasanjo never shared nor tampered with the cumulative dividends. Whatever taxes paid from the NLNG go through the Federal Inland Revenue Services (FIRS) and recorded as part of the income of the Federal   Government.

 

It is imperative to note that by the end of the tenure of President  Goodluck Jonathan, NLNG dividends had risen to a cumulative $5.6 billion  and not a single cent was ever taken from the funds.

 

UNQUOTE

 

If therefore we put this APC information together with the FIRS Bulletin news above in which FIRS sought a tax waiver, it would appear that it did get tax relief (and was it put in a tax haven, according to the PDP?) at least on CIT (or is it PPT?) in 2011, 2012 and 2013, in which years it was REQUIRED to pay EDT of $0.3 billion (the assessable 2% of CIT each year), and hence was probably allowed relief of the accompanying $1.5 billion each of those years, to a total tune of $4.5 billion.

 

Bottom line is that to determine the taxes have NLNG actually paid to FIRS, one would need a proper accounting of its CIT (or PPT?), VAT, WHT and EDT from at least 2007 to date, including any tax reliefs provided.

 

 

HOW MUCH TAX REVENUE HAS FIRS MADE?

 

I wanted to find out two things:  how much FIRS has made over the years, how much of that total has been paid into the Federation Account.

 

These two pieces of information are given in Tables 1 – 3 computed from information available on FIRS’s website, which show that from January 2011 to June 2015, the FIRS collected a total of about N21 trillion, of which almost 58%  (N12 trillion) was PPT and 42% (N9 trillion) are non-oil taxes.  Of the collected total, N16 trillion (or 75%) should have been paid to the Federation Account, the rest into Special or other Independent Accounts. Judging from the fact that the total FEDERAL BUDGET from 2011 to 2015 was N23.83 trillion (see Table 4), this means that FIRS intake alone would have been able to fund almost 90% of that budget!

 

 

THE 1999 CONSTITUTION AND PUBLIC FUNDS

 

Prominent among the discussions-of-the-week in Nigeria, outside of President Buhari’s recent visit to the United States, are; the legality, sheer existence or otherwise of the “bailout” of states that have not been able to pay their workers’ salaries and wages; the legality or otherwise of ministerial and/or presidential withdrawals from the ECA (in particular a certain $2.1 billion n 2014), and the true financial flows and current status of the country’s Excess Crude Account ECA.

 

At a certain level of analysis, all of these issues are related, but I shall deal with them ad seriatim – but first, the Constitution and Budget Flow Diagram (BFD).

 

If you read Sections 59, 80-89 and 162-169 of the 1999 Constitution (See Box 1), you will learn about :

(1)     The Consolidated Revenue Fund (CRF) of the Federation, a portion from which the Annual Budget Appropriations of the Federal Government (not of the Federation) are to be paid, a budget as proposed by the President and approved by the National Assembly.  These budgets are proposed, discussed and approved ANNUALLY, and have little or nothing directly to do with the States and Local Governments, unless there are Federal Government REFUNDS to be made to those entities.

(2)    The Federation Account (FA), into which ALL monies accruing to the Federation are to be paid – except for certain Independent Revenue –  and from which monies can only be disbursed to the Federal Government, the States and the Local Governments largely by FORMULA as authorized by the National Assembly.  Invariably, these formulas (as advised by the Revenue Mobilization Allocation and Fiscal Commission RFMAC), once having been set down, are not due for revision for five to ten years.

(3)    The Federal Budget (FB) of the Federal Government of Nigeria (FGN), constructed from the CRF and the FGN’s Independent Revenue.

The constitutional relationship between the FA and CRF, showing their sources, beneficiaries and formulae for distribution are set out in Figure 2 below, which I have heavily annotated with respect to the original Budget Office of Nigeria version, and which I urge the reader to study very closely. 

 

The sources of inflow (revenue) into the FA can be classified into two – Oil and Non-Oil Revenues.  Only Independent Revenue of the Federal Government bypasses the CRF and goes directly into the Budget. Note that the arrows that leave the box surrounding the FA (and its partner in the box, the VAT Pool, which has a different formula for distribution between the three tiers of government) go to the stipulated beneficiaries from the FA – i.e. Federal Government, the States and the Local Government – which can get monies ONLY by applicable formulae as indicated on the diagram, while the arrows leaving the CRF go LARGELY to the Federal Government, as well as to certain Special Funds.

 

 

IS A PARTICULAR DISTRIBUTION LEGAL, WITHOUT NEC AND/OR NATIONAL ASSEMBLY APPROVAL?

 

Inspection of Figure 2 enables us to establish some guiding principles about what is legal and what is not when it comes to how money received is directed and spent.

(1)    Any money that accrues to the Federation must either go into the Federation Account (and its VAT Pool) or Independent Revenue.

(2)    Formulae for distribution from the FA and the VAT Pool have already been long established, while distribution for the Federal Budget is by annual National Assembly appropriation and assent by the President.

(3)    If money is determined destined to go into FA or VAT Pool, then it can be distributed according to the specified formula WITHOUT further or new National Assembly approval. Put in another way, if it is distributed according to the indicated formula then it does not need new National Assembly approval – prior approval of formula is adequate.  That is the spirit in which the recent NLNG+Shell tax payment distribution of $2.1 billion did not require new NA approval.  However, ANY other method or formula of distribution – or block use of the money – would be illegal WITHOUT new NA approval.  In this case, the bailout can be considered an early emergency (and remote) FAAC meeting sharing of money.  This calls into question whether face-to-face monthly FAAC meetings are necessary, if there is trust between all parties. Eschewing such monthly meetings in Abuja – and ensuring electronic transfers to state, local and federal government accounts – will save the country a lot of travel and per diem money. On the other hand, if as claimed in some quarters that the NLNG is considered an investment of the Federal Government rather than of the Federation, then the DIVIDEND arising from that would be considered an INDEPENDENT revenue of the FGN, and would go straight to the Federal Budget (rather than to the FA), and hence should not be shared by the other two tiers of government without National Assembly approval.  In that case, any sharing of NLNG dividend could be considered a “bailout” awaiting NA approval.

(4)    The Excess Crude Account ECA of which there are two types – the Foreign Excess Revenue Account FERA, which is maintained in U.S dollar, and the Domestic Excess Revenue Account, DERA which is naira denominated –  was set up in 2004 as a SAVINGS to be used by all the three tiers of government (see Box 2) AND distributed according to FA formula when needed.  Any other distribution eg block use of the money,  or departure from the formula, must be either with the assent/consent  of ALL the three tiers of government (as represented by the National Economic Council NEC), and/or of the National Assembly.  That is why when, in 2004, the Niger-Delta Power Holding Company NDPHC (http://ndphc.net/) was established to manage the NIPP (Nigerian Integrated Power Programhttp://ndphc.net/?page_id=3331 ), the NEC and NA assented in August 2005 to provide $2.5 billion from the ECA, and in late 2008, another $5.375 billion also from the ECA (http://ndphc.net/?page_id=3162 ). In fact that in 2012, 2013 and 2014, the additional sums of $82.57 million, $94.22 million and $54.9 million were paid from the ECA for the NIPP.  Furthermore, in October 2011, $1 billion from the ECA was removed to kick off the Sovereign Wealth Fund SWF, which itself, along with the managing National Sovereign Investment Authority NSIA (http://nsia.com.ng/) was created by an act of National Assembly in May 2011.  From these three precedents totaling $8.875 billion legally removed in lump sums from the ECA (with three-year periodicity!) since 2005 – with an additional total of $231.69 million between 2012 and 2014 – one posits that any unilateral action to remove $2.1 billion from the ECA in 2014 to pay for fuel subsidy without NEC and/or NA approval should have been avoided by NOI/Presidency. After all, there is evidence to show that fuel subsidy payments had already been confessedly made from the ECA already, in the sums of $1.818 billion in 2011, $2.63 billion in 2012, $3.26 billion in 2013 and $3.14 billion in 2014.  Whether the $2.1 billion being lately referred is part of the $3.14 billion – or a separate payment – remains to be confirmed.

 

DO YOU NEED A LOG TABLE TO COMPUTE ECA BALANCES?

 

Do you need to use a log table to solve a single linear algebraic equation in one unknown?  That was an comical issue brought up recently by Governor Oshiomohle.  Now, if you know the beginning balance B1, the end balance B2 of a particular period, and the Outflow O, clearly you determine the inflow I:

 

                               B2 = B1 + I – O

 

 Consequently                           

                              I = B2 + O – B1

 

In the continuing shouting match between the Governor and former Economy Coordinator/Finance Minister Madame Ngozi Okonjo-Iweala (NOI), she has always insisted that she has published all of O, as well as B2 and B1.  Unless one or both of B2 and B1 is/are not given – or unless  you don’ trust the numbers given – then we know what O is, Governor!

 

But even knowing the inflow I, the Governor also has the right to know when (various dates), how much, and the various sources of the various streams of inflows that came in to total I – to fulfil all righteousness.

 

 

THE EXCESS CRUDE ACCOUNT – A MORE DETAILED CATALOGING FROM SO MANY SOURCES 

 

The inflows, outflows and balances of the Excess Crude Account since its establishment in 2004 (during the Obasanjo administration’s second term of May 29 2003 – May 29 2007, and Dr. Okonjo-Iweala’s first term as Finance Minister of 15 July 2003 – 21 June 2006) are periodically made available by the Central Bank, the Federal Ministry of Finance, Niger-Delta Power Holding Company (see above) and from speculations in the Press and social media (For an extensive tracking of the ECA on Nairaland, see Box 5)

 

When it comes to reliable information on ECA movements from open source, the most comprehensive is from the CBN (Annual reports and Monetary Policy Reports MPR), which routinely reports them along with Foreign Reserves movements. The CBN reports indicate that from 2005 when the ECA started off with a balance of $5.10 billion, it increased by accumulation by the end of 2006 to $9.783 billion, then to $22.18 billion in 2007 (the Obasanjo administration ended in May 2007, to be replaced by the Yar’Adua Administration) before a slight decline to $20.34 billion at the end of 2008.  Amidst Yar’Adua’s illness, and Jonathan’s ascendancy to the Presidency in May 2010, by June 2010, the CBN indicates that the ECA had dropped drastically to $4.00 billion, further declining to $2.0 billion by the end of that 2010 year.  It built up again to $5.2 billion at the end of 2011 (Dr. Ngozi Okonjo-Iweala became Finance Minister/Coordinating Minister of the Economy on July 11, 2011), and to $11.5 billion by the end of 2012, before becoming less than $5b on November 14 of 2013, falling further to $2 billion by the end of that year 2013, just a month afterwards. In fact, in a scathing report in early 2014, the CBN wrote that

 

 

QUOTE

 

In January 2014, we are yet to have a budget approved, and there is no end in sight to high recurrent spending. The Federation has squandered its Excess Crude Savings, from $11.5billion at the beginning of 2013 to under $2.5billion today (February 2014). This, moreover, has happened in a period of high and stable oil prices and high levels of production and crude lifting, in spite of losses due to oil theft and vandalism.

 

UNQUOTE

 

Many of CBN’s figures and dates are different slightly from the ones given by former Minister Okonjo-Iweala’s defence of her tenure.  In two statements (See Box 3 and Box 4), she revealed that at the end of May 2007, there was $9.43 billion in the Excess Crude Account; that by common agreement between the FGN and State Governors, in 2009, an amount of about $5.5 billion was drawn from the ECA and used for investment in Independent power projects; and that the account had an opening balance of $4.56bn in 2011 and reached a peak in 2012 at $8.7bn before declining to $2.3bn in 2013.  She has also given extensive information on ECA withdrawals by the three tiers of government from 2011-2014 (See Table 5), with the states getting N2.92 trillion

Recently Premium Times published its estimate of a 2007-2014 time series of eight Accruals totaling $166.87 billion  (N23.791 trillion)   and nine Withdrawals totaling  $82.356 billon (N11.850 trillion) from the ECA,  with a balance (as of May 2015) of $2.060 billion (N344.447 billion), thereby alleging a gap unaccounted for of $82.458 billion (N11.556 trillion).

 

It has been difficult to reconcile the Premium Times withdrawal figures (2007 – $5.67 billion;  2008-$14.02 billion;  2009 – $10.50 billion, 2010-$8.94 billion , 2011 – $12.13 billion; 2012-$10.33 billion,  ; 2013-$10.29 billion + NIPP $8.425 billion; 2014- $2.06 billion )  and Accrual figures (2007 – $23.24 billion; 2008 – $27 billion; 2009 – $13.96 billion; 2010 – $13.39 billion; 2011 – $31.32 billion; 2012 – $29.89 billion; 2013 – $12.61 billion and 2014 – $15.46 billion) with (for example) the CBN figures of withdrawals and/or of balances.  The Premium Times figures of accruals are improbably high and may not include cost of goods sold and other operations.

 

Finally, a well-researched blog article in Nairaland gives credible history of inflows, outflows and balances of the ECA.  It claims that while Obasanjo left $20billion in the ECA in May 2007, Yar’adua left $6.5billion for President Jonathan to inherit, after pledging $5 million to NIPP, and distributing the balance of $8.5 billion to the three tiers of government under pressure from state governors by the end of 2009.  This was reduced to a mere $0.460 billion ($460 million) in August 2010 following the documented sharing of $2.3 billion by May 2010, $1 billion to SWF and a further $2 billion shared among the states, among possibly other undocumented distributions.   While under Dr. Ngozi Okonjo-Iweale the balance in the ECA grew to $9 billion by the end of 2012. Federal Ministry of Finance reports show that N6.21 trillion was shared From ECA between 2011 and 2014, with the the Federal Government’s share being N3.29 trillion while the 36 states received a total of N2.92 trillion. The states were reported to have received N966.6 billion in 2011, N816.3 billion in 2012, N859.4 billion in 2013 and N282.8 in 2014, such that by the time Jonathan left in May 2015, only about $2 billion was left in the ECA.

 

It is important to note that all documents put the ECA balance as of May 2015 at about $2.07bn. That is where we are at the moment.

 

EPILOGUE

 

Tracking the inflows and outflows of ECA, FIRS and NLNG – not to talk of the CBN, NNPC, NIMASA, DPR, NCS, NAP, etc. – is quite challenging.  However, there are a lot of crumbs of evidence out there to show that what we are writing about is a lot of money, some of which might have disappeared under unusual circumstances.   That is why President Muhammadu Buhari’s recent approval of a comprehensive probe or audit into the operations of the nation’s Excess Crude Accounts and the Nigerian National Petroleum Corporation (NNPC) [See Box 6] is very welcome.

 

 

And there you have it.

 

 






 

 

TABLE 1: SUMMARY OF FIRS ANNUAL TAX REVENUES Jan 2011-June 2015 (billion Naira)

 

    PPT Non-PPT Total   FA Non-FA Total Comment
2011  

3,085.29

1,543.19

4,628.48

3,786.03

842.45

4,628.48

2012  

3,215.30

1,792.32

5,007.62

4,047.91

959.71

5,007.62

2013  

2,668.66

2,136.98

4,805.64

3,664.80

1,140.84

4,805.64

2014  

2,453.95

2,260.61

4,714.56

3,658.78

1,055.78

4,714.56

2015  

697.00

1,154.00

1,851.00

697.00

1,154.00

1,851.00

Jan-June only

Estimates

TOTAL  

12,120.2

8,887.1

21,007.30

15,854.52

5,152.78

21,007.30

 

TABLE 2: FIRS TAX QUARTERLY REVENUE SINCE 2011 – BY PPT and NON-OIL

  Q1 Q2 Q3 Q4 Total Year

2011

       

2011

PPT          657.43       648.19       888.23       891.45    3,085.29
Non-Oil          297.76       337.12       528.70       379.61    1,543.19
Total          955.19       985.31    1,416.92    1,271.05    4,628.48
           

2012

       

2012

PPT          857.16       743.95       798.32       815.87    3,215.30
Non-Oil          315.31       523.28       567.74       385.99    1,792.32
Total      1,172.47    1,267.23    1,366.06    1,201.86    5,007.62
           

2013

       

2013

PPT          802.94       793.43       520.48       551.81    2,668.66
 Non-Oil          403.79       643.08       635.25       454.87    2,136.98
Total      1,206.73    1,436.51    1,155.73    1,006.68    4,805.64
           

2014

       

2014

PPT          638.09       639.27       594.80       581.79    2,453.95
Non-Oil          418.29       815.90       604.43       421.99    2,260.61
Total      1,056.37    1,455.17    1,199.23    1,003.78    4,714.56
           

2015

     Total Q1+Q2  

2015

PPT          368.59       328.41       697.00    
Non-Oil          388.12       765.88    1,154.00    
Total          756.71    1,094.29    1,851.00    
           
January 2011 – June 2015          
PPT    12,120.20

57.69518

     
Non-Oil      8,887.10

42.30482

     
Total    21,007.30

100

     
           

 

 

 

TABLE 3: FIRS QUARTERLY TAX REVENUE SINCE 2011  – BY FEDERATION ACCOUNT AND NON-FEDERATION ACCOUNT

 

  Q1 Q2 Q3 Q4 Total Year

2011

       

2011

Fed Acct           774.68        807.30         1,159.16     1,044.90    3,786.03
Non-Fed           180.51        178.00             257.77        226.16        842.44
Total           955.19        985.31         1,416.92     1,271.05    4,628.48
           

2012

       

2012

Fed Acct           975.64    1,037.67         1,058.80        975.79    4,047.91
Non-Fed           196.82        229.56             307.26        226.07        959.71
Total       1,172.47    1,267.23         1,366.06     1,201.86    5,007.62
           

2013

       

2013

Fed Acct           959.48    1,214.81             763.92        726.59    3,664.80
Non-Fed           247.25        221.69             391.81        280.09    1,140.84
Total       1,206.73    1,436.51         1,155.73     1,006.68    4,805.64
           

2014

       

2014

Fed Acct           818.28    1,200.21             876.37        763.91    3,658.78
Non-Fed           238.09        254.96             322.86        239.87    1,055.78
Total       1,056.37    1,455.17         1,199.23     1,003.78    4,714.56
           

2015

     Total Q1+Q2  

2015

Fed Acct           537.68        159.32             697.00    
Non-Fed           219.03        934.97         1,154.00    
Total           756.71    1,094.29         1,851.00    
           
January 2011 – June 2015          
Fed Acct     15,854.53

75.471517

     
Non-Fed       5,152.77

24.528483

     
Total     21,007.30

100

     
           

 

 

 

TABLE 4:  HISTORICAL BUDGET FIGURES FOR FGN (In BILLION NAIRA)

S/N CATEGORY  2011  2012  2013

 

 2014  2015 TOTAL
               
1 Statutory Transfers

196.12

372.59.

387.98

408.69

375.62

1,741.00

2 Debt Services

542.38

559.58

591.76

712.00

953.62

3,359.34

3 Capital

1,005.99

1,284.24

1,621.46

1,119.61

557.00

5,588.30

4 Recurrent

(Non-Debt)

2,481.71

2,432.43

2,386.02

2,454.89

2,607.13

12,362.18

5 Total

4,226.20

4,648.84

4,987.22

4,695.19

4,493.37

23,050.82

6 SURE-P

0.00

180.00

273.52

268,37

21.03

779.55

7 Grand Total

4,226.20

4,828.84

5,260.74

5,000.19

4,514.40

23,830.37

 

 

TABLE 5: ECA Disbursement by States 2011 – 2014

S/N State Amount

Disbursed

from ECA

2011-2014

1 Akwa Ibom

265.0

2 Rivers

 230.4

3 Delta

216.7

4 Bayelsa

176.3

5 Kano

106.5

6 Lagos

82.9

7 Ondo

81.7

8 Kaduna

79.9

9 Katsina

76.1

10 Borno

75.2

11 Oyo

74.2

12 Imo

71.89

13 Niger

71.81

14 Bauchi

69.5

15 Edo

 67.5

16 Benue

67.2

17 Jigawa

66.5

18 Kogi

61.9

19 Osun

 61.4

20 Sokoto

 61.2

21 Anambra

 59.9

22 Adamawa

59.7

23 Kebbi

59.4

24 Ogun

59.1

25 Cross River

 56.7

26 Plateau

56.4

27 Abia

56.1

28 Yobe

55

29 Zamfara

 53.8

30 Taraba

53.6

31 Kwara

52.8

32 Enugu

51.6

33 Gombe

47.7

34 Nassarawa

46.9

35 Ekiti

46.8

36 Ebonyi

44.3

   

  Sub-total States

2923.6

  FGN

3290.0

  GRAND TOTAL

6213.6

 

 

FIGURE 1: FIRS NEWSLETTER OF MAY 2012

 

FIGURE 2 NIGERIA’S REVENUE FLOWS – FEDERATION ACCOUNT, ETC.

 

FIGURE 3: PREMIUM TIMES’ ECA ACCRUALS AND WITHDRAWALS ESTIMATE 

 

 FIGURE 4: PREMIUM TIMES’ SUMMARY OF NIGERIA’S ECA (ACCRUALS AND WITHDRAWALS )

 

BOX 1: Appropriations and Public Revenue Sections of the 1999 Constitution

 

58. (1) The power of the National Assembly to make laws shall be exercised by bills passed by both the Senate and the House of Representatives and, except as otherwise provided by subsection (5) of this section, assented to by the President.

(2) A bill may originate in either the Senate or the House of Representatives and shall not become law unless it has been passed and, except as otherwise provided by this section and section 59 of this Constitution, assented to in accordance with the provisions of this section.

(3) Where a bill has been passed by the House in which it originated, it shall be sent to the other House, and it shall be presented to the President for assent when it has been passed by that other House and agreement has been reached  between the two Houses on any amendment made on it.

(4) Where a bill is presented to the President for assent, he shall within thirty days thereof signify that he assents or that he withholds assent.

(5) Where the President withholds his assent and the bill is again passed by each House by two-thirds majority, the bill shall become law and the assent of the President shall not be required.

59. (1) The provisions of this section shall apply to:

(a) an appropriation bill or a supplementary appropriation bill, including any other bill for the payment, issue or withdrawal from the Consolidated Revenue Fund or any other public fund of the Federation of any money charged thereon or any alteration in the amount of such a payment, issue or withdrawal; and

(b) a bill for the imposition of or increase in any tax, duty or fee or any reduction, withdrawal or cancellation thereof.

(2) Where a bill to which this section applies is passed by one of the Houses of the National Assembly but is not passed by the other House within a period of two months from the commencement of a financial year, the President of the Senate shall within fourteen days thereafter arrange for and convene a meeting of the joint finance committee to examine the bill with a view to resolving the differences between the two Houses.

(3) Where the joint finance committee fails to resolve such differences, then the bill shall be presented to the National Assembly sitting at a joint meeting, and if the bill is passed at such joint meeting, it shall be presented to the President for assent.

(4) Where the President, within thirty days after the presentation of the bill to him, fails to signify his assent or where he withholds assent, then the bill shall again be presented to the National Assembly sitting at a joint meeting, and if passed by two-thirds majority of members of both houses at such joint meeting, the bill shall become law and the assent of the President shall not be required.

(5) In this section, “joint finance committee” refers to the joint committee of the National Assembly on finance established pursuant to section 62(3) of this Constitution……

 

——

 

E – Powers and Control over Public Funds

80. (1) All revenues or other moneys raised or received by the Federation (not being revenues or other moneys payable under this Constitution or any Act of the National Assembly into any other public fund of the Federation established for a specific purpose) shall be paid into and form one Consolidated Revenue Fund of the Federation.

(2) No moneys shall be withdrawn from the Consolidated Revenue Fund of the Federation except to meet expenditure that is charged upon the fund by this Constitution or where the issue of those moneys has been authorised by an Appropriation Act, Supplementary Appropriation Act or an Act passed in pursuance of section 81 of this Constitution.

(3) No moneys shall be withdrawn from any public fund of the Federation, other than the Consolidated Revenue Fund of the Federation, unless the issue of those moneys has been authorised by an Act of the National Assembly.

(4) No moneys shall be withdrawn from the Consolidated Revenue Fund or any other public fund of the Federation, except in the manner prescribed by the National Assembly.

81. (1) The President shall cause to be prepared and laid before each House of the National Assembly at any time in each financial year estimates of the revenues and expenditure of the Federation for the next following financial year.

(2) The heads of expenditure contained in the estimates (other than expenditure charged upon the Consolidated Revenue Fund of the Federation by this Constitution) shall be included in a bill, to be known as an Appropriation Bill, providing for the

issue from the Consolidated Revenue Fund of the sums necessary to meet that expenditure and the appropriation of those sums for the purposes specified therein.

(3) Any amount standing to the credit of the judiciary in the Consolidated Revenue Fund of the Federation shall be paid directly to the National Judicial Council for disbursement to the heads of the courts established for the Federation and the State under section 6 of this Constitution.

(4) If in respect of any financial year it is found that –

(a) the amount appropriated by the Appropriation Act for any purpose is insufficient; or

(b) a need has arisen for expenditure for a purpose for which no amount has been appropriated by the Act, a supplementary estimate showing the sums required shall be laid before each House of the National Assembly and the heads of any such expenditure shall be included in a Supplementary Appropriation Bill.

82. If the Appropriation Bill in respect of any financial year has not been passed into law by the beginning of the financial year, the President may authorise the withdrawal of moneys in the Consolidated Revenue Fund of the Federation for the purpose of meeting expenditure necessary to carry on the services of the Government of the Federation for a period not exceeding months or until the coming into operation of the Appropriate Act, whichever is the earlier:

Provided that the withdrawal in respect of any such period shall not exceed the amount authorised to be withdrawn from the Consolidated Revenue Fund of the Federation under the provisions of the Appropriation Act passed by the National Assembly for the corresponding period in the immediately preceding financial year, being an amount proportionate to the total amount so authorised for the immediately preceding financial year.

83. (1) The National Assembly may by law make provisions for the establishment of a Contingencies Fund for the Federation and for authorising the President, if satisfied that there has arisen an urgent and unforeseen need for expenditure for which no other provision exists, to make advances from the Fund to meet the need.

(2) Where any advance is made in accordance with the provisions of this section, a Supplementary Estimate shall be presented and a Supplementary Appropriation Bill shall be introduced as soon as possible for the purpose of replacing the amount so advanced.

84. (1) There shall be paid to the holders of the offices mentioned in this section such remuneration, salaries and allowances as may be prescribed by the National Assembly, but not exceeding the amount as shall have been determined by the Revenue Mobilisation Allocation and Fiscal Commission.

(2) The remuneration, salaries and allowances payable to the holders of the offices so mentioned shall be a charge upon the Consolidated Revenue Fund of the Federation.

(3) The remuneration and salaries payable to the holders of the said offices and their conditions of service, other than allowances, shall not be altered to their disadvantage after their appointment.

(4) The offices aforesaid are the offices of President, Vice-President, Chief Justice of Nigeria, Justice of the Supreme Court, President of the Court of Appeal, Justice of the Court of Appeal, Chief Judge of the Federal High Court, Judge of the Federal High Court, Chief Judge and Judge of the High Court of the Federal Capital Territory, Abuja, Chief Judge of a State, Judge of the High Court of a State, Grand Kadi of the Sharia Court of Appeal of the Federal Capital Territory, Abuja, President and Judge of the Customary Court of Appeal of the Federal Capital Territory, Abuja, Grand Kadi and Kadi of the Sharia Court of Appeal of a State, President and Judge of the Customary Court of Appeal of a State, the Auditor-General for the Federation and the Chairmen and members of the following executive bodies, namely, the Code of Conduct Bureau, the Federal Civil Service Commission, the Independent National Electoral Commission, the National Judicial Council, the Federal Judicial Service Commission, the Judicial Service Committee of the Federal Capital Territory, Abuja, the Federal Character Commission, the Code of Conduct Tribunal, the National Population Commission, the Revenue Mobilisation Allocation and Fiscal Commission, the Nigeria Police Council and the Police Service Commission.

(5) Any person who has held office as President or Vice-President shall be entitled to pension for life at a rate equivalent to the annual salary of the incumbent President or Vice-President:

Provided that such a person was not removed from office by the process of impeachment or for breach of any provisions of this Constitution.

(6) Any pension granted by virtue of subsection (5) of this section shall be a charge upon the Consolidated Revenue Fund of the Federation.

(7) The recurrent expenditure of judicial offices in the Federation (in addition to salaries and allowances of the judicial officers mentioned in subsection (4) of this section) shall be charge upon the Consolidated Revenue Fund of the Federation.

85. (1) There shall be an Auditor-General for the Federation who shall be appointed in accordance with the provisions of section 86 of this Constitution.

(2) The public accounts of the Federation and of all offices and courts of the Federation shall be audited and reported on to the Auditor-General who shall submit his reports to the National Assembly; and for that purpose, the Auditor-General or any person authorised by him in that behalf shall have access to all the books, records, returns and other documents relating to those accounts.

(3) Nothing in subsection (2) of this section shall be construed as authorising the Auditor-General to audit the accounts of or appoint auditors for government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly, but the Auditor-General shall –

(a) provide such bodies with –

(i) a list of auditors qualified to be appointed by them as external auditors and from which the bodies shall appoint their external auditors, and

(ii) guidelines on the level of fees to be paid to external auditors; and

(b) comment on their annual accounts and auditor’s reports thereon.

(4) The Auditor-General shall have power to conduct checks of all government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly.

(5) The Auditor-General shall, within ninety days of receipt of the Accountant-General’s financial statement, submit his reports under this section to each House of the National Assembly and each House shall cause the reports to be considered by a committee of the House of the National Assembly responsible for public accounts.

(6) In the exercise of his functions under this Constitution, the Auditor-General shall not be subject to the direction or control of any other authority or person.

86. (1) The Auditor-General for the Federation shall be appointed by the President on the recommendation of the Federal Civil Service Commission subject to confirmation by the Senate.

(2) The power to appoint persons to act in the office of the Auditor-General shall vest in the President.

(3) Except with the sanction of a resolution of the Senate, no person shall act in the office of the Auditor-General for a period exceeding six months.

87. (1) A person holding the office of the Auditor-General for the Federation shall be removed from office by the President acting on an address supported by two-thirds majority of the Senate praying that he be so removed for inability to discharge the functions of his-office (whether arising from infirmity of mind or body or any other cause) or for misconduct.

(2) The Auditor-General shall not be removed from office before such retiring age as may be prescribed by law, save in accordance with the provisions of this section.

88. (1) Subject to the provisions of this Constitution, each House of the National Assembly shall have power by resolution published in its journal or in the Official Gazette of the Government of the Federation to direct or cause to be directed investigation into –

(a) any matter or thing with respect to which it has power to make laws, and

(b) the conduct of affairs of any person, authority, ministry or government department charged, or intended to be charged, with the duty of or responsibility for –

(i) executing or administering laws enacted by National Assembly, and

(ii) disbursing or administering moneys appropriated or to be appropriated by the National Assembly.

(2) The powers conferred on the National Assembly under the provisions of this section are exercisable only for the purpose of enabling it to –

(a) make laws with respect to any matter within its legislative competence and correct any defects in existing laws; and

(b) expose corruption, inefficiency or waste in the execution or administration of laws within its legislative competence and in the disbursement or administration of funds appropriated by it.

89. (1) For the purposes of any investigation under section 88 of this Constitutional and subject to the

provisions thereof, the Senate or the House of Representatives or a committee appointed in accordance with section 62 of this Constitution shall have power to –

(a) procure all such evidence, written or oral, direct or circumstantial, as it may think necessary or desirable, and examine all persons as witnesses whose evidence may be material or relevant to the subject matter;

(b) require such evidence to be given on oath;

(c) summon any person in Nigeria to give evidence at any place or produce any document or other thing in his possession or under his control, and examine him as a witness and require him to produce any document or other thing in his possession or under his control, subject to all just exceptions; and

(d) issue a warrant to compel the attendance of any person who, after having been summoned to attend, fails, refuses or neglects to do so and does not excuse such failure, refusal or neglect to the satisfaction of the House or the committee in question, and order him to pay all costs which may have been occasioned in compelling his attendance or by reason of his failure, refusal or neglect to obey the summons, and also to impose such fine as may be prescribed for any such failure, refused or neglect; and any fine so imposed shall be recoverable in the same manner as a fine imposed by a court of law.

(2) A summons or warrant issued under this section may be served or executed by any member of the Nigeria Police Force or by any person authorised in that behalf by the President of the Senate or the Speaker of the House of Representatives, as the case may require.

…….

 

C – Public Revenue

162. (1) 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.

(2) The President, upon the receipt of advice from the Revenue Mobilisation Allocation and Fiscal Commission,

shall table before the National Assembly proposals for revenue allocation from the Federation Account, and in

determining the formula, the National Assembly shall take into account, the allocation principles especially those

of population, equality of States, internal revenue generation, land mass, terrain as well as population density;

Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less

than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.

(3) Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State

Governments and the Local Government Councils in each State on such terms and in such manner as may be

prescribed by the National Assembly.

(4) Any amount standing to the credit of the States in the Federation Account shall be distributed among the

States on such terms and in such manner as may be prescribed by the National Assembly.

(5) The amount standing to the credit of Local Government Councils in the Federation Account shall also be

allocated to the State for the benefit of their Local Government Councils on such terms and in such manner as

may be prescribed by the National Assembly.

(6) 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.

(7) Each State shall pay to Local Government Councils in its area of jurisdiction such proportion of its total

revenue on such terms and in such manner as may be prescribed by the National Assembly.

(8) The amount standing to the credit of Local Government Councils of a State shall be distributed among the

Local Government Councils of that State on such terms and in such manner as may be prescribed by the House

of Assembly of the State.

(9) Any amount standing to the credit of the judiciary in the Federation Account shall be paid directly to the

National Judicial Councils for disbursement to the heads of courts established for the Federation and the States

under section 6 of this Constitution.

(10) For the purpose of subsection (1) of this section, “revenue” means any income or return accruing to or derived by the Government of the Federation from any source and includes –

(a) any receipt, however described, arising from the operation of any law;

(b) any return, however described, arising from or in respect of any property held by the Government of the

Federation;

(c) any return by way of interest on loans and dividends in respect of shares or interest held by the Government

of the Federation in any company or statutory body.

163. Where under an Act of the National Assembly, tax or duty is imposed in respect of any of the matters

specified in item D of Part II of the Second Schedule to this Constitution, the net proceeds of such tax or duty

shall be distributed among the States on the basis of derivation and accordingly –

(a) where such tax or duty is collected by the Government of a State or other authority of the State, the net

proceeds shall be treated as part of the Consolidated Revenue Fund of that State;

(b) where such tax or duty is collected by the Government of the Federation or other authority of the Federation,

there shall be paid to each State at such times as the National Assembly may prescribe a sum equal to the

proportion of the net proceeds of such tax or duty that are derived from that State.

164. (1) The Federation may make grants to a State to supplement the revenue of that State in such sum and subject to such terms and conditions as may be prescribed by the National Assembly.

(2) The Federation may make external grants to a foreign State or any international body in furtherance of the

foreign policy objectives of Nigeria in such sum and subject to such terms and conditions as may be prescribed

by the National Assembly.

165. Each State shall, in respect of each financial year, pay to the Federation an amount equal to such part of the

expenditure incurred by the Federation during that financial year for the purpose of collection of taxes or duties

which are wholly or partly payable to the State pursuant to the provisions of this Part of this Chapter or of any

Act of the National Assembly as is proportionate to the share of the proceeds of those taxes or duties received by

the State in respect of that financial year.

166. (1) Any payment that is required by this Part of this Chapter to be made by the Federation to a State may be

set-off by the Federation in or towards payment of any sum that is due from that State to the Federation in

respect of any loan made by the Federation to that State.

(2) The right of set-off conferred by subsection (1) of this section shall be without prejudice to any other right of

the Federation to obtain payment of any sum due to the Federation in respect of any loan.

167. Any payment that is required by this Part of this Chapter to be made by the Federation to a State shall be a

charge upon the Consolidated Revenue Fund of the Federation and any payment that is so required to be made

by a State to the Federation shall be a charge upon the Consolidated Revenue Fund of that State.

169. (1) Where any payment falls to be made under this Part of this Chapter, the amount payable shall be certified by the Auditor-General for the Federation;

Provided that a provisional payment may be made before the Auditor-General has given his certificate.

(2) The National Assembly may prescribe the time at and manner in which any payment falling to be made under this Part of this Chapter shall be effected and provide for the making of adjustments and provisional payment.

 

 

BOX 2: Central Bank Report on ECA and SWF

 

 

CENTRAL BANK REPORT

 

QUOTE

Excess Crude Account (ECA) and the Sovereign Wealth Fund (SWF)

 

The Excess Crude Account (ECA) was established in 2004 with the primary objective of protecting government budgets against shortfalls arising from volatile crude oil price. It is an inter-generational fund aimed at discouraging total consumption of current earnings.

 

The ECA was primarily funded from revenue derived from Crude Oil Sales, Petroleum Profit Tax (PPT) and Royalties above the budgeted benchmark of the FGN for each year. There are two types of excess revenue accounts; the Foreign Excess Revenue Account, which is maintained in U.S dollar, and the Domestic Excess Revenue Account, which is naira denominated. Surging crude oil prices led to the ECA increasing almost four-fold; from US$5.10 billion in 2005 to over US$20.00 billion by November 2008, which accounted for more than one-third of Nigeria’s external reserves at that time. By June 2010, the account had been drawn down to less than US$4.00 billion due to budget deficits at all levels of government and the steep drop in oil prices.

 

In 2010, Nigeria’s National Economic Council approved a plan to replace the ECA with a national Sovereign Wealth Fund (SWF) since the ECA had no legal backing. In May 2011, the National Assembly passed the Nigeria Sovereign Investment Authority (NSIA) Bill, 2010, which sought to establish a SWF to manage excess earnings from the country’s crude oil sales. It was later signed into law by the President.

 

The SWF became operational in October 2011 with US$1.00 billion drawn from US$6.00 billion in the ECA. The Fund is designed to ensure that some of Nigeria’s oil wealth is saved and could be tapped on a regular basis to finance the government’s running costs. The fund would help the country to save for the future and invest in strategic infrastructural projects as well as act as a buffer against volatile oil prices.

 

The NSIA will receive monthly allocation of a portion of oil and gas revenue above the budgeted revenue as approved by the National Assembly. The NSIA will manage the SWF comprising the following:

 

  • · Future Generations Fund,
  • · Stabilization Fund, and
  • · Nigeria Infrastructure Fund.

 

UNQUOTE

 

 

 

 

 

BOX 3: Statement by the Federal Ministry of Finance on “The Facts about Nigeria’s Excess Crude Account and Foreign Reserves Position”

 

 

The Facts about Nigeria’s Excess Crude Account and Foreign Reserves Position

1

 

A STATEMENT BY THE FEDERAL MINISTRY OF FINANCE

January 8, 2015

 This statement is issued to, once again, clarify the facts of the recent history and status of Nigeria’s Excess Crude Account and foreign reserves, an issue that is, in this election season, gaining more headline attention. Because of the importance of this key economic indicator, we believe it is important to restate the true position in the interest of the Nigerian public as well as local and international investors.

First, it is absolutely not true that the Administration of President Goodluck Jonathan has squandered the nation’s reserves. The facts are clear and indisputable. At the end of May 2007, Nigeria’s gross reserves stood at $43.13 billion – comprising the CBN’s external reserves of $31.5 billion, $9.43 billion in the Excess Crude Account, and $2.18 billion in Federal Government’s savings. These figures can be independently verified from the CBN’s records. The figure of $67 billion cited in some recent commentary is therefore factually incorrect.

Second, it is a misconception to think that reserves are immutable or cast in stone. The reality is that since May 2007, the reserves have fluctuated in line with developments in the international oil market, rising from $43.13 billion at that time, peaking at $62 billion in September 2008 during the Yar’adua/Jonathan Administration when oil prices reached a peak of $147 per barrel, and falling subsequently to a low of $31.7 billion in September 2011. This fall in reserves was largely a result of the vicissitudes of the global economy and oil market which caused the CBN to intervene, using some of the reserves, to defend the value of the naira.

Third, the Excess Crude savings, which it should be noted is a component of the reserves, was largely used to cushion the economy at the height of the global financial crisis in 2008-2009. As a result, Nigeria was one of the few countries in the world that did not seek assistance from international financial institutions at that time. The fiscal stimulus used to shore up the economy during that period was shared by all 3-tiers of government. Similarly, savings in the ECA were also used to pay for fuel subsidies for the entire nation and that sharing continued after the crisis ended.  Starting in 2012, such payments have been published each time they are made.

Fourth, It is true the savings in the ECA would now have been higher but for the fact that a number of Governors, against strong professional advice, actively kicked against continuous building up of the ECA and, indeed, pushed for its sharing. It is on record that States even took the Federal Government to court on this matter, and the case is still pending at the Supreme Court.

Fifth, it is also worth noting that the Jonathan administration built the first ever Sovereign Wealth Fund for the nation in which savings are being made for future generations of Nigerians and important infrastructure investments are being supported. It is also a matter of public knowledge that the Fund would have generated more savings and investments if the same sort of opposition that blocked savings in the ECA had also not been at work.

Furthermore, by common agreement between the FGN and State Governors, in 2009, an amount of about $5.5 billion was drawn from the ECA and used for investment in Independent power projects. Today, various State governments are shareholders in the projects and hold share certificates confirming their stake in the projects.

On the use of reserves, it is not correct to say that the nation’s external reserves were dipped into or misapplied by the Administration. Anyone familiar with foreign reserves management will be aware that the Federal Government cannot dip its hands into the external reserves. Like in other countries, the management of external reserves is one of the statutory mandates of the Central Bank of Nigeria (CBN). Section 2 sub-section (c) of the CBN Act (2007) states that the Bank shall “maintain external reserves to safeguard the international value of the legal tender” – in other words, to defend the value of the Naira. No President since the democratic dispensation has contravened this Act.

The reserves are also used to settle both public and private sector foreign currency obligations, including the importation of goods such as equipment for power sector. Whenever an Agency of Government or a private individual/company needs to make a payment in foreign currency (e.g. payment of goods and services, settlement of external debt, etc) it must provide the naira equivalent to the CBN in exchange for the required foreign currency.

From the above, it is clear that Nigeria’s reserves during the period were not squandered but used appropriately in the course of normal transactions required for the development of the Nigerian economy.

Signed

FEDERAL MINISTRY OF FINANCE

 

 

BOX 4: ECA: FG, states shared N6.2tn in four years, says Okonjo-Iweala

 

ECA: FG, states shared N6.2tn in four years, says Okonjo-Iweala

MAY 25, 2015 : IFEANYI ONUBA

 

The Federal Government on Sunday night released details of how N6.21tn was shared from the Excess Crude Account by the federal and state governments between 2011 and 2014.

The breakdown was released by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, through a statement by her Special Adviser on Communications, Mr. Paul Nwabuikwu.

The minister had last week promised to make details of the account available following a demand by the state governors under the Nigeria Governors’ Forum that she should explain how she had managed the over $20bn in the ECA between June 2013 and April 2015.

However, in the document issued on Sunday, the minister said she needed to make public the details “to clarify issues thrown up by recent claims made by Governor Rotimi Amaechi of Rivers State on behalf of some governors.”

Analyses of the allocation as revealed by the document showed that in addition to their constitutionally approved receipts from the Federation Account, the Federal Government received the sum of N3.29tn, while the 36 states got a total of N2.92tn from the ECA within the four-year period

A further breakdown of the ECA disbursement showed that the 36 states received N966.6bn in 2011; N816.3bn in 2012; N859.4bn in 2013 and N282.8bn in 2014.

The document attributed the low figure shared in 2014 to a steep decline in revenues due to the impact of the crash in global oil prices, which began in the middle of that year.

Akwa Ibom, with N265bn, got the highest allocation from the ECA; while Rivers and Delta states followed with N230.4bn and N216.7bn, respectively.

Other states with highest allocations, according to the document, are Bayelsa, N176.3bn; Kano, N106.5bn; and Lagos, N82.9bn.

On the other hand, Kwara (N52.8bn), Enugu (N51.6bn), Gombe (N47.7bn), Nasarawa (N46.9bn), Ekiti (N46.8bn) and Ebonyi (N44.3bn) received the least amounts.

The summary of the inflows and outflows from the account indicated that the opening balance was $4.56bn in 2011 and reached a peak the following year at $8.7bn before declining to $2.3bn in 2013.

The document put the balance as of May 2015 at $2.07bn, noting that “the fluctuation in the ECA reflects the sharing of the proceeds usually requested by state governors as well as the practice of augmentation.”

It said the augmentation involved additional sharing from the ECA by both tiers of government when available funds were not adequate to meet revenue projections.

Okonjo-Iweala had last week described the governors’ demand as strange because issues relating to the management of the ECA were usually discussed by the commissioners of Finance of the 36 states of the federation during the monthly Federation Accounts Allocation Committee meeting.

She had said since the commissioners were representatives of their respective governors at the meeting, there was no basis for the demand.

Okonjo-Iweala’s statement read in part, “It has come to our attention that governors under the aegis of the Nigeria Governors’ Forum have requested that the Coordinating Minister for the Economy and Minister of Finance should account for an estimated $20bn oil revenue from the Excess Crude Account from June 2013 to April 2015.

“There is no basis for the demand and the stated amount. The statement by the governors is totally strange because FAAC meets every month and the ECA is discussed at every session, with all the state commissioners of Finance present.”

What states got from Excess Crude Account- Okonjo-Iweala

May 24, 2015

Written by Nduka Chiejina (Assistant Editor)

Keeping to her promise to disclose what the states got from the Excess Crude Account, the Minister of Finance Ngozi Okonjo-Iweala-Iweala Sunday said the 36 states of the federation, received a total of N2.92 trillion from the account between 2011 and 2014.
A statement from the Federal Ministry of Finance released Sunday night said the it had become necessary to make the figures public following recent accusations by the Rivers state governor on behalf of state governors.
The statement from the federal ministry of Finance noted that the “figures show that they (states) received N966.6 billion in 2011, N816.3 billion in 2012, N859.4 billion in 2013 and N282.8 in 2014. The low figure for 2014 reflects the steep decline in revenues due to the impact of the crash in global oil prices which began in the middle of the year.
Akwa Ibom got the highest with (N265 billion), Rivers (N230.4 billion), Delta (N216.7 billion), Bayelsa (N176.3 billion), Kano (N106.5 billion) and Lagos (N82.9 billion) respectively got these amounts from the ECA.
Kwara (N52.8 billion), Enugu (N51.6 billion), Gombe (N47.7 billion), Nassarawa (N46.9 billion), Ekiti (N46.8 billion) and Ebonyi (N44.3 billion) received the least amounts in that order.
The statement added that “the summary of the inflows and outflows from the Account shows that the opening balance was $4.56 billion in 2011 and reached a peak the following year at $8.7 billion before declining to $2.3 billion in 2013. The balance as at May 2015 is $2.07 billion.”
The fluctuation in the ECA the statement explained “reflects the sharing of the proceeds usually requested by state governors as well as the practice of Augmentation which involves additional sharing from the ECA when available funds are not adequate to meet revenue projections.”
The ministry noted that Subsidy and SURE-P payments are also made from the Excess Crude Account while the Federal Government’s share from the ECA during the period was N3.29 trillion.

 

State Govts Shared N2.92tn from Excess Crude Account in Four Years

25 May 2015

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Minister of Finance, Dr Ngozi Okonjo-Iweala

 

Ndubuisi Francis and James Emejo in Abuja 


 

It has been revealed that the 36 states of the federation shared a total of N2.92 trillion from the Excess Crude Account (ECA) between 2011 and 2014.

The federal government’s share of the allocation from the ECA in the same period was put at N3.29 trillion.

According to information released Sunday by the Federal Ministry of Finance, the state governments received the sum of N966.6 billion in 2011, N816.3 billion in 2012, N859.4 billion in 2013 and N282.8 in 2014.

The clarification was  thrown up by recent claims made by Rivers State Governor, Mr. Rotimi Amaechi on behalf of some governors,  asking the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala to account for $20 billion allegedly missing from the ECA,

According to the figures released, five states including Akwa Ibom, Rivers, Delta, Bayelsa, Kano and Lagos top the list of highest recipients from the ECA with N265 billion, N230.4 billion, N216.7 billion, N176.3 billion, N106.5 billion and N82.9 billion respectively.

On the other hand, Kwara, Enugu, Gombe, Nassarawa, Ekiti and Ebonyi States received the lowest allocations of N52.8 billion, N51.6 billion, N47.7 billion, N46.9 billion, N46.8 billion and N44.3 billion respectively from the ECA.

The summary of the inflows and outflows from the ECA showed the opening balance at $4.56 billion in 2011 and reached a peak of $8.7 billion in 2012 before declining to $2.3 billion in 2013.

The balance of the ECA as at May 2015 was put at $2.07 billion.

The ministry further argued that the fluctuation in the ECA reflected the sharing of the proceeds usually requested by state governors as well as the practice of augmentation- which involves additional sharing from the ECA when available funds are not adequate to meet revenue projections.

Additionally, subsidy and SURE-P payments are also made from the ECA.

The amount shared to states from the ECA is usually in addition to their constitutionally approved receipts from the Federation Account.

According to the figures, the low figure shared for 2014 reflected the steep decline in revenues due to the impact of the crash in global oil prices which began in the middle of the year.

Other beneficiaries of the ECA from 2011 to 2015 included Ondo state which received N81.7 billion, Kaduna-N79.9 billion, Katsina N76.1 billion, Bornu N75.2 billion, Oyo N74.2 billion, Imo N71.89 billion and Niger N71.81 billion.

Others are Bauchi N69.5 billion, Edo N67.5 billion, Benue N67.2 billion, Jigawa N66.5 billion, Kogi N61.9 billion, Osun 61.4 billion and Sokoto N61.2 billion.

Others are Anambra N59.9 billion, Adamawa N59.7 billion, Kebbi N59.4 billion, Ogun N59.1billion, Cross River N56.7 billion, Plateau N56.4 billion, Abia N56.1 billion, Yobe N55 billion, Zamfara N53.8 billion and Taraba N53.6 billion.

 

 

 

 

BOX 5:  A TRACKING ON NAIRA-LAND

 

http://www.nairaland.com/2438214/jonathan-noi-governors-excess-crude

 

Since retracing my step back to PDP I vowed to critically investigate issues before taking position. From the very first day that the ECA “controversy” started I have maintained that officers of the immediate past administration have no case to answer.

 

I had to take my time to do an indepth write-up on the ECA, and linked it with the contentious $2billion. PLEASE read with an open mind…

 

Pre-Jonathan: Obasanjo Left $20billion In ECA, Yar’adua Left $6.5billion

When late President Umaru Yar’Adua was sworn in on May 29th, 2007, the ECA held $20billion, out of which $5 billion had been pledged by the three tiers of government to the National Independent Power Project (NIPP), which jointly own the account.

 

2008/2009

The Governors under the unbrella of Nigeria Governors Forum led by Bukola Saraki in 2008 instituted a lawsuit at the Supreme Court against the Yar’adua government calling for the sharing of the $15billion ECA. Yar’adua in 2009 opted for out of court settlement. By end of 2009 it had dropped from $15billion to $6.5billion.

 

Jonathan Inherited $6.5billion ECA (Pre-NOI Era)

 

January 2010:

When Jonathan was made “overseer” during the vegetable state of Yar’adua in December 2010, the Governors insisted that the $6.5 billion ECA be shared. In January 2010, President Jonathan Goodluck acceded to the governors’ and agreed to share $2 billion from the ECA.

 

May 2010:

Jonathan also approved additional deduction of N339.627 billion from the account to augment arrears due to the three tiers (Federal, State and Local Governments) in May 2010.

 

July 2010:

Despite the almost $4billion shared between January and May 2010, the Governors led by Saraki demanded that the left over $3billion ECA be shared.

www.thisdaylive.com/articles/excess-crude-govs-want-3bn-shared/82376/

 

August 2010

In August 2010 the FG under Jonathan bugged into the demand of the Governors and withdrew the $3billion from the Excess Crude Account, leaving behind a meagre $460 million. The Government of Jonathan however paid $1billion into the Sovereign Wealth Fund (SWF) and shared the $2billion among the three tiers of government

www.vanguardngr.com/2010/08/fg-draws-down-3bn-from-excess-crude-account/

 

Note that Dr Ngozi Okonjo Iwaela wasn’t the Finance Minister as at this time.

The Accountant-General during this period was Alh Ibrahim Dankwambo (the incumbent Gov of Gombe state)

 

Jonathan’s 2011-2015 (NOI Era)

Under Okonjo Iwaela as the Finance Minister the government started having renewed battle with the governors led by APC Hon Chibuike Amaechi (calling for the sharing of ECA).

 

October 2011

Three years after the Governors settled out of Court with Yar’adua, the Governors led by Amaechi went to Supreme court in October 2011 to demand that the $1billion saved in SWF be shared along with the billions in ECA.

m.thenigerianvoice.com/news/72745/1/govs-sue-fg-ask-s-court-to-block-1b-sovereign-weal.html

 

March 2012

FG under Jonathan proposed out of court settlement with the Governors to save the SWF and ECA.

www.channelstv.com/2012/03/27/excess-crude-accountfg-asks-state-governors-for-out-of-court-settlement/

 

May 2012

Despite the out of court settlement, the Governors were so determined to share the money, instituted another lawsuit again two months later asking the Supreme Court to stop the FG from saving $2billion in SWF but instead “share the money”.

www.vanguardngr.com/2012/05/sovereign-wealth-fund-govs-ask-s-court-to-abort-fgs-plan-to-withdraw-2bn/

 

May 25, 2015

N6.21 trillion Shared From ECA Between 2011 and 2014 (May 25, 2015)

According to a report by the Federal Ministry of Finance, the Federal Government’s share from the ECA during the period of 2011 to 2014 was N3.29 trillion while the 36 states received a total of N2.92 trillion. They received N966.6 billion in 2011, N816.3 billion in 2012, N859.4 billion in 2013 and N282.8 in 2014.

www.vanguardngr.com/2015/05/fg-states-shared-n6-21trn-from-excess-crude-account-in-four-years/

 

Jonathan/NOI Grew ECA From $450m in 2010 to $9billion in 2012

As at August 2010, the ECA stood at meagre $450million. However, the NOI/GEJ increased this money to $9billion at the end of 2012.

www.cp-africa.com/2012/12/03/nigerias-excess-crude-account-eca-more-than-doubles-in-one-year-as-it-rises-to-about-9-billion/

 

Let me also add that ALL the monies shared from ECA between the period of December 2010-December 2014 were generated by the Jonathan’an administration. Also the leftover $2billion is to the credit of Jonathan’s administration.

 

Despite the windfall, almost all the governors plunged their states into serious debt.

 

 

 

 

BOX 6:  Missing $2.1 bn, N3.8tr Excess crude, NNPC funds: FG begins probe

Missing $2.1 bn, N3.8tr Excess crude, NNPC funds: FG begins probe

NigerianNation    06/30/2015    General News

 

 

Oshiomhole, Dankwambo, El-Rufai lead inquiry

By Lawrence Olaoye

 

President Muhammadu Buhari has approved a comprehensive probe into the operations of the nation’s Excess Crude Accounts and the alleged financial malfeasance in the Nigerian National Petroleum Corporation (NNPC).

 

Specifically, the government is investigating alleged withdrawal of $2.1 billion from the Excess Crude Account by the former President Goodluck Jonathan’s administration and the N3.8 trillion unremitted into the government coffers between 2012 and 2015.

 

Buhari after inaugurating the maiden National Economic Council (NEC) left his Vice, Professor Yemi Osinbajo to chair the body and it was resolved that a committee comprising four governors be set up to “look at the proper management of the ECA/Federation Accounts and report back recommendations to the council.”

 

Governors on board of the panel were those of Edo, Gombe, Kafuna and Akwa-Ibom states.

 

Briefing newsmen after the NEC meeting yesterday, Edo state governor, Comrade Adams Oshiomhole, with his Kaduna, Gombe and Akwa-Ibom counterparts, disclosed that the management of the NNPC and the office of the Accountant General of the Federation (AGF) were compelled by the President to render accounts to the Council on issues pertaining to the total sale of the nation’s crude from 2012 and 2015.

 

He said, “We are talking about transparency, we are talking about change. And what we saw from those numbers, I believe that Nigerians are entitled to know, is that whereas the NNPC claimed to have earned N8.1 trillion, what NNPC paid into the federation account from 2012 to May 2015 was N4.3 trillion.

 

“What it means is that NNPC withheld and spent N3.8 trillion. The major revelation here is that the entire federation: the federal government, the states and all the 774 local governments, the amount the NNPC paid into the federation account for distribution to this three tiers of government came to N4.3 trillion and NNPC alone took and spent N3.8 trillion. Which means the cost of running NNPC is much more than the cost of running the Federal Government. That tells you how much is missing, what is mismanaged, what is stolen, there are huge figures.”

 

Oshiomhole pointed out that it is only in Nigeria that a government concern would generate and spend money without passing the rigour of appropriation by the National Assembly.

 

“If the federal government cannot spend without appropriation, why should any agency spend without cooperation. NIMASA for example whatever they earned they are supposed to pay into federation account and also present the budget of their requirements. This is what the constitution provided for. And this is what President Buhari has promised to do that henceforth all monies must go to the federation account. What you need you budget for. Nigeria cannot continue with you earn the money and spend it. Where is transparency? Where is the role of the National Assembly? So if you were doing that you won’t have a situation where the NNPC alone will spend N3.8 trillion and remit to the federal, states and local governments N4.3 trillion which means NNPC is taking about 47 per cent and that explains all the leakages you are talking about,” he explained.

 

On the balance in the Excess Crude Account, Oshiomhole said “We looked at the numbers for the Excess crude account, the last time the Minister of Finance and Coordinating Minister of the Economy, reported to the Council and it is in the minute, she reported by by November 2014, that we had $4.1 billion but today the Accountant General Office reported we have $2.0 billion. Which means she spent $2.1billion without authority of the NEC. And that money was not distributed to states, it was not paid to the three tiers of government. This is why the NEC has set up a panel to look at what accrued, what was it spent for, when and by whom. So that Nigerians will have the full picture of all the transactions as regards the much talked about Excess crude.”

 

Giving an explanation for the reason for the operation of the Excess Crude Account by former President Olusegun Obasanjo, Kaduna state governor, Nasir el-Rufa’i, said “The Excess Crude was started by President Olusegun Obasanjo around 2004-2005. I was part of the decision that led to the creation the Excess Crude Account. It was administrative arrangement to save for a rainy day. And it was meant to have very clear accountability such that every state and local government, in a particular state knows their balance in the Excess Crude Account, though you can’t spend it but you know how much of it is yours. That was the arrangement.

 

“And in those days, before we spend any money from the Excess Crude Account, the federal and states governments will meet and agree. That is how we agreed to build the seven power stations which is NIPP today, it was from Excess Crude Account. And also met and agreed to build the Lagos – Kano Standard Gauge Rail Line from the Excess Crude Account. But what we have seen, in the last few months or years is that the ‎Excess Crude Account was operated unilaterally by the federal government, drawings were made unilaterally without consulting those that actually own the money because the Excess Crude Account is 52 percent owned by the federal government and 48 by the states and LGA,” he alleged.

 

Source:: PeoplesDailyNg

 

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