National Economic Council, NEC, yesterday raised the alarm on how some federal revenue generating agencies engage in unauthorised spending of money meant to be remitted to the Federation Account.
Governor Willy Obiano of Anambra State stated this while briefing State House correspondents on the outcome of the NEC meeting, presided over by Vice President Yemi Osinbajo at the Presidential Villa.
Governor Obiano, who said that such infraction has been going on for a long time, stated that Minister of Finance, Kemi Adeosun told NEC that the activities of the agencies amounted to financial abuse.
He said: “The long term financial abuse by some revenue generating agencies was taken at the council. The Finance Ministry reported to the council certain activities of some revenue generating agencies that amounted to financial abuse of the revenue they generate.
“They include paying salaries above specifications, converting official cars to personal ownership, monitising medical allowances arbitrarily, unapproved overseas travels, lavished training allowances, excessive personal loan approval including unapproved mortgages.”
He assured that the Ministry of Finance and the Revenue Mobilisation, Allocation and Fiscal Accounts Commission, RMAFC, were working together to “rein in these abuses as these revenue agencies raise as much as N1.5trn and spend almost 90 per cent on its recurrent expenditure.”
Obiano stated that NEC was told that even though the act has been going on for decades, such financial abuses whereby the agencies hide the revenues that ought to go to the Federation Accounts will now be exposed and terminated.
On Excess Crude Account, ECA, Obiano who briefed newsmen alongside his Bauchi State counterpart, Abubakar Mohammed, and the Minister of State for Petroleum Resources, Ibe Kachikwu, said the balance of the account presented by the Adeosun stood at $2.4bn as at November 2016.
On ecological fund, he said N2bn was said to have been paid to the states by the last administration.
“However, some states did complain that they did not have equal share of the money or even got anything at all. The reason why that occurred will be investigated and report made available to the president,” he added.
In his remark, Kachikwu revealed that NEC endorsed a new funding regime for the oil and gas industry, eliminating Cash Call regime and thereby saving the country at least $1bn from next year.
According to Kachikwu, beginning from 2017, the issue of Cash Call era would disappear.
He stated that the current upstream Joint Venture arrangement in the oil and gas industry was Unincorporated Joint Venture (UJV), meaning that NNPC and the International Oil Companies, IOCs, partner in each Joint Venture as unique and separate legal entities.
The minister also noted that while NNPC pays the entire oil and gas revenues realised from the JV operations into the Federation Account, the production costs are appropriated, calendarised and paid monthly as Cash Calls to the JV operations from the NNPC and IOCs.
He said from January to November this year, underfunding of the NNPC Cash Calls was estimated at $2.3bn, noting that this is in addition to the inherited arrears estimated at $6.8bn for 2015.
However, he disclosed that through negotiations, the $6.8bn Cash Calls burden on the federation has now been reduced to $5.1bn, which would be paid based on an improved oil production output.
He added: “For the first time, the oil industry will take responsibility for arranging their own funding and being able to produce oil and save the Federal Government the whole nightmare of cash calls every year.
“So, this is a very dramatic move in the oil industry we are still going to make presentation to the National Assembly for them to understand this.”
He also spoke of plan to reduce the cost of crude oil production in Nigeria.
He said: “We will be looking at reducing the cost of barrel per production from the current $27 per barrel which is one of the highest in the world to a figure within the threshold of $18 per barrel over the next two years and ultimately, to about $15 over the next four years.
“The barrel reserve production should increase to about 2.5m by 2019 and potentially to about 3m barrels by 2021. So, there will dramatic effects.”
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