The sensational disclosure by the Senate that no fewer than 60 federal government agencies failed to remit over N3 trillion generated revenue into the Federation Account (FA) from 2014 to 2020 is certainly no complimentary news. The Federal Ministry of Finance, Budget and National Planning earns full blame for dereliction of duty by condoning, over the years, opaque handling and retention by government agencies, of significant amounts of revenue that ordinarily should have been audited regularly and remitted to the FA. The curious explanation by Mrs. Zainab Ahmed, Minister of Finance, Budget and National Planning, that the unremitted funds were intact and within the system; and that some of the affected parastatals have started crediting government coffers with the outstanding revenues they generated six years ago, merely confirms willful abandonment of the ministry’s statutory responsibility of ensuring full collection and remittance of government revenues as and when due to enable FA beneficiaries to plan and implement their budgets without borrowing or, if need be, by incurring minimal deficit as a means of providing the requisite foundation for a sound and productive economy. That foundation has, sadly, remained elusive.
The Olamilekan Adeola-led Senate Committee on Finance made the allegation in the course of investigating revenue remittances by MDAs between 2014-2020 and payment of one per cent Stamp Duty on all contract awards by the MDAs within the same period. Although the committee did not categorically name the agencies involved, sources told Huhuonline.com that almost all the revenue-generating agencies of the government failed to remit generated funds into government coffers. Adeola explained that over N3 trillion of generated revenue of the government was trapped with the MDAs, which might have spent them on frivolous expenditures contrary to the provisions of the 1999 Constitution (as amended) and the 2007 Fiscal Responsibility Act (FRA). The ranking Senator spoke at the weekend when Minister Ahmed; Director-General of Budget Office, Ben Akabueze; Auditor General of the Federation, Idris Ahmed and other heads of agencies appeared before the committee over the ongoing investigation into revenue remittances by MDAs between 2014 and 2020. According to Senator Adeola, from submissions already made and calculations from the Fiscal Responsibility Commission, about 60 Government Owned Enterprises (GOEs), are illegally keeping about N3 trillion of unremitted government revenue in their coffers.
“We have noticed that in the so-called 80 per cent of operational surplus the agencies refer to, many of these agencies proved frivolous expenditure and they have taken advantage of the current system and refuse to remit this amount as at when due. We tried to audit the account of these agencies year in year out for the past five years and some of the revelations are scaring. How do we explain that an agency of government that has a provision in the budget for Capital, Overhead and Personnel, in their audited account, they have gross revenue of N500 million and they are asking for N200 million?…There is no gainsaying the fact that if these revenues are paid to the Consolidated Revenue Fund (CRF) for proper appropriation by the parliament during budget considerations, we are going to reduce dramatically the size of our deficit and hopefully, minimize our borrowing. We cannot continue to run government business as we used to do in this time when there are huge demands for government to fund needed infrastructure and other socio-economic programs.”
The poster child of unremitted revenues is the Nigerian National Petroleum Corporation (NNPC) which has elevated the practice of unremitted oil revenues into statecraft. Despite many forensic audits, the NNPC is neck deep and steeped in corruption. To begin with, a little analysis of the Central Bank data on liftings on crude oil by NNPC shows that the billions of dollars that cannot be readily reconciled by the relevant agencies tallies with the value of approximately 47% of domestic crude allocation (DCA) over the period that was swapped or refined offshore. Because the combined value of non-petrol derivatives of crude oil that was refined offshore exceeds that of the petrol portion that was imported, the NNPC netted profits on swapped crude oil which, after reconciliation, should be remitted in dollars to the FA.
NNPC locally refines the balance of about 53% of the DCA. Apart from petrol, refined petroleum products including kerosene (in practice) are deregulated. NNPC, therefore, enjoys full cost recovery and even makes huge savings or profit on locally processed DCA, too. Consequently, the naira value of the entire petrol obtained from the DCA (using the world price of crude oil) should be remitted to the FA. The foregoing shows that in addition to swelling the FA, “if NNPC properly manages the allocation of 445,000 barrels per day effectively, the availability of (various refined) products can be achieved by the NNPC alone,” was the conclusion of the House Ad-hoc Committee on Fuel Subsidy back in April 2012.
Nine years on, the NNPC has stuck to its operations which are not only steeped in corruption but also withholds oil receipts from the FA thereby undermining the economy, which to all intents and purposes is an act of economic sabotage.
Minister Ahmed exulted in self-defence as to why many agencies are committing all manner of illegalities relating to the expenditure of government funds that should rightly be paid into the Consolidated Revenue Fund (CRF). That display of unconcern underscores the official unwillingness to do things right. It does not suffice to say the funds are within the system; or that some of the agencies have started paying the unremitted funds into government coffers. She should read the riot act and throw the book at any defaulting government agency. The unremitted revenues, whatever the figure, remain a stigma that must be dealt with immediately.
In the circumstance, there is need to ascertain publicly the size of the naira and dollar proceeds arising from the less-than-transparent handling of the government revenue for as far back as the statute of limitations permits. Any outstanding revenue plus any accrued interests should be remitted to the Federation Account without delay. In order to reduce the endemic corruption in the nation and help improve the economy, several other measures should be adopted urgently like making public the exact amount of unremitted revenue per agency. Nigerians in their own right should have access to such information and they should, therefore, demand it.
The other area where, in the final analysis, the Finance Ministry half-heartedly attempts to get collected oil revenues corruptly withheld from the FA by various petroleum sector operators relate to the Nigeria Extractive Industries Transparency Initiative (NEITI). Some time ago, the then Secretary to the Government of the Federation (SGF), inaugurated an expanded Inter-Ministerial Task Team (IMTT) of high-ranking officials. The team was charged with the responsibility of recovering all unremitted revenues that NEITI audit reports (they began to be issued in 2006) have unearthed. Regrettably, that move was a classic case of passing the buck despite the Goodluck Jonathan administration’s hypocritical conviction “that once transparency is implanted in the management of the nation’s abundant extractive resources, it will boost the government’s efforts towards poverty reduction, sustainable development, social harmony as well as better investment climate.”
Yet, the early NEITI reports seem to have been overtaken by the statute of limitations. The truth is that NEITI audit findings and recommendations that are not counted by reports of the Auditor-General of the Federation do not require the imprimatur of further time-buying bureaucratic contraption before the President or the SGF, upon receipt of statutorily mandatory FMF requisition, issues appropriate directive to put the audit decisions into effect. All outstanding NEITI findings, therefore, only need to be implemented complete with associated sanctions against any defaulting agencies and individuals. That would be the beginning of value for money or value for blessings for Nigerians.
