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Saturday, 20 July 2013

FG in cash trouble

 BY IFEANYI ONUBA AND GBENRO ADEOYE 


Coordinating Minister for the economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala
There are concerns in government circles that the country’s revenue projection for the 2013 fiscal year may not be realised.
Saturday PUNCH learnt that the gross oil revenue accruing to the Federation Account had dwindled seriously in recent times.
The drop in revenue has raised fears that the Federal Government may not be able to implement the 2013 budget. Sources in government attributed the drop to massive oil theft, illegal bunkering and pipeline vandalism.
Figures obtained by this newspaper, showing the monthly allocations to the three tiers of government by the Federation Accounts Allocation Committee, revealed that the country only realised N3.893tn as gross federally collected revenue in the first six months of 2013.
This sum, according to an analysis of the document, showed a shortfall of N321.73bn against the projected revenue of N4.215tn that was projected for the country for the six months period.
According to the FAAC document, the monthly budgeted gross federally collected revenue for the country is put at N702.54bn. This is expected to be realised from three revenue sources – mineral revenue, N465.057bn; non-mineral revenue, N158.711bn and Value Added Tax, N78.77bn.
However, further investigations revealed that the N3.893tn revenue for the first half of this year was earned as follows: January, N651.26bn; February, N571.7bn; and March, N595.71bn. In the months of April, May and June, revenue receipts by the country were N621.07bn,
N590.77bn and N863.02bn respectively.
In the same vein, the country recorded significant revenue drop between January and May.
The shortfalls were recorded as follows; January N51.28bn; February N130.84bn; March N106.84bn, April N81.47bn and May N111.77bn. Curiously, there was a surplus of N160.48bn in June as the country’s revenue receipts of N863.02bn exceeded the budgeted sum of N702.54bn owing to completion of pipeline repairs in some terminals.
It was gathered that unless the revenue generating agencies step up their efforts and leakages in the oil sector were taken care off, the country might only realise about N7.78tn for the 2013 fiscal year instead of the projected N8.43tn going by the first-half revenue trend.
During the week, the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, said that the country was losing 400,000 barrels of crude oil per day to illegal bunkering and vandalism of oil pipelines.
Okonjo-Iweala, who appeared before the House of Representatives Joint Committee on Appropriation/Finance in Abuja last Tuesday, had said, “We are losing revenue; 400,000 barrels of crude oil are lost on a daily basis due to illegal bunkering, vandalism and production shut-in.
“I have to clarify that it is not as if the entire 400,000 barrels is stolen, no. What happens is that whenever the pipelines are attacked and oil is taken, there   is a total shut down. All the quantity of oil produced for that day will be lost because it means government cannot sell it and it means a drop in revenue.”
The minister explained that this was the reason President Goodluck Jonathan sought to amend the 2013 Appropriation Act as against sending a supplementary budget to the National Assembly.
She pointed out that with the revenue shortfalls currently facing the country, there was no way the government could afford a supplementary budget.
Okonjo-Iweala told the committee, “You cannot talk of supplementary budget when your revenue is going down. That is why we are asking for an amendment to restore the money that was removed.”
Worried by the shortfall in revenue, the Federal Government had constituted a committee headed by the Governor of Bauchi State, Alhaji Isa Yuguda, to address the oil theft problem.
Other members of the committee are the Governors of Delta, Dr. Emmanuel Uduaghan; Anambra, Mr. Peter Obi; and Gombe,
Alhaji Ibrahim Dankwambo.
The rest are the Minister of Finance, Director General of the Budget Office of the Federation, Dr. Bright Okogu; and the Accountant General of the Federation, Mr. Jonah Otunla.
Okonjo-Iweala said the committee had also resolved to address the root cause of the revenue challenges facing the country.
Reacting to this development, the Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, warned that a revenue drop could hurt the nation’s economy.
Rewane said, “If indeed about 400,000 barrels of crude oil are lost every day, that’s about 20 per cent of daily oil production. Remember crude oil is the mainstay of Nigeria’s economy. If they take away 20 per cent of your salary, you know how that will affect you. Nigeria cannot survive on what will be left if that amount of revenue is lost every day.”
But a public intellectual and economist, Henry Boyo, expressed surprise that Nigeria had lost so much to oil bunkering despite the huge sums government had spent to secure oil facilities and pipelines.
“It is quite surprising that despite the huge amount that has been spent by the Federal Government to put in place security patrols on the coasts of the Niger Delta, oil bunkering has reached this stage. ,” he said.
Also, political economist, Pat Utomi, said the diversification of the nation’s revenue streams, and not worries about a drop in revenue, should be government’s immediate concern.
He said, “I have always belonged to the school of thought that suggests that only a small percentage of the oil revenue should be shared between the tiers of government
“I have even suggested, even though with tongue in cheek, that Nigeria should cap its oil wells so that we
can make a conscious effort at developing other sectors. All kinds of individuals who should not have been anywhere near governance are running to become public servants because of oil revenue.
“We have been killing other sectors of our economy. Maybe we need to be broke to return to our senses and dedicate more time to other sector such as agriculture, and manufacturing,” the economist said.
Punch

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