Reps: Govt Losing billions To Unremitted Funds
The House of Representatives said the Federal Government was losing huge revenue to under remittances of Internally Generated Revenue (IGR) by government agencies.
It said if agencies of government were remitting adequate revenue, the government would have no business resorting to borrowing to finance the budget yearly.
The House directed the Budget Office of the Federation to deduct the balance of such under remittances from allocation to defaulting agencies, saying it was not fair to the system for agencies both in the private and public sector to refuse to remit revenue to government.
The Accountant-General of the Federation has also directed the Nigerian National Petroleum Corporation (NNPC) to refund about N52 billion it deducted from the Federations Account to the government treasury as operating surplus for 2018.
Chairman of the House Committee on Finance, Hon James Abiodun Faleke, who made the position of the House known during an interactive session with government agencies on the 2021-2023MTEF/FSP frowned at the loss of over N7 billion to under remittances from the National Agency for Food, Drug Administration and Control (NAFDAC), saying there was no law that permits any agency to spend the money it generates without the approval of the National Assembly.
The Committee had discovered a revenue of about N10 billion in the revenue of the agency from which nothing was remitted to the government treasury on the premise that the money was spent by the agency on inspection of factories of clients of the agency who want to either establish a factory or wants to import products.
Director Administration and Human Resources of NAFDAC, who represented the Director-General, Joseph Ayorinde Aina, claimed that they obtained the permission of the Budget Office of the Federation to spend the money generated through its user fee platform.
Faleke said: “You are talking about user fees and that you use it to travel either local or overseas. Don’t you have your overhead budget? Don’t you know that under your activities, you are going to travel and that you will present your overhead budget.
“When you are bringing your budget, you know your activities. Every agency is aware of their activities and one of your activities is that you need to go and carry out inspection which should have formed part of your overhead expenses and government will release the money to you.
“But the fact that you have a shortfall in releases does not empower you to spend your IGR. No agency of government is empowered to do that. Not even the Ministry of Finance or even Mr. President. It is clear. The president will tell you to go and do it according to the law.
“It is not right that government is losing about N7 billion to your expenditure; N7 billion which should have come to the system out of which you can then draw. Tell Madam that we will not take it. She is there to reform the system and we trust that she will do that. But you cannot spend the IGR the way you like.
“If you do that, the accounting officer can be prosecuted and we as National Assembly will see to that. In the past few weeks, we have been talking about Chinese loans when the money is there in the system. We have the money in Nigeria, but we are not doing the needful.
“We are not remitting what we are supposed to remit. The private sector will not remit the taxes and you, a government agencies being paid salaries will not remit. Where will the government get money to fund the capital projects when we have deficit budget every year?
“I don’t think it is fair on the system. An agency came here and said they will generate N100 million, but will spend N130 million.”
In their presentation, the Chief Finance Officer of the NNPC, Umar Ajiya informed the committee that in recent times they have been working hand in hand with Revenue Mobilisation, office of the Accountant-General of the federation, DPR, Inland Revenue, Nigeria Governors Forum and others almost on a monthly basis.
He said the Accountant-General of the Federation has directed the Corporation to refund N52 billion operating surplus to the Federations Account, adding that the NNPC has already paid about N25 billion of the money.
Ajiya said: “Our performance over the years is as a result of volume, price and cost. In recent time, we have been working closely with the Revenue Mobilisation, office of the Accountant-General of the Federation, DPR, Inland Revenue, Nigeria Governors Forum and others almost on a monthly basis.
“The Budget Office is our primary partner in setting up the budget appropriation document. What we have realised over the years is that to the extent that we are OPEC (Organisation of Petroleum Exporting Countries) members, our ability to produce and sell is curtailed.
“For example, we almost got to 2.4 million barrel production per day before the OPEC meeting came and cut it down to 1.4 million barrel per day. Similarly, the Covid-19 impact has collapsed the price to below cost of production.
“What this tells us is that as an agency of government responsible for oil and gas production, we have to put a watch on the cost. But the cost is our key focus going forward.
“In 2018, the office of the Accountant-General of the Federation charged us as a corporation to return N52 billion as operating surplus to the Consolidated Revenue Fund of the federation and we have agreed on a repayment plan and we have already paid about N25 billion.
He said what Covid-19 has taught us is that we should be prudent, conservative and watch our cost and that is really our focus, adding that the current management of the NNPC has been the most transparent in the history of the agency.
Group General Manager Corporate Plaining & Strategy, Meyiwa Eyesan who presented the revenue projection of the corporation said the NNPC is projecting a revenue of N3.54 trillion as its contribution to the Federations account in 2021.
He said for 2022, the NNPC projects to contribute N4.385 and N5.341 trillion for 2023 N5.341 with a flat crude oil price for the period, saying “I think that is understandable given the precarious situation that we find ourselves in 2020”.
She said: “Revenue projections are drawn from revenue from oil and gas sale. What we have presented today showed the revenue reconciled with all the regular parties involved in the FAAC process and the budget Office is full represented in that process. We have all sat together, reconciled these figures and signed these numbers off and there are minutes of these meetings
“For 2018, NNPC contributed N1.249 trillion to government, and N1.146 trillion in 2019. These figures are net of cost recovery. The cost includes physical deduction of JV operations, other government funded projects, the National Domestic Gas Development project, pipeline maintenance among others.
“For 2020, about N349 billion has accrued to government as at half year end and that is reflective of the effect of the pandemic. I am sure that we all recall that the crude price clashed in the international market. We are fortunate that the prices has picked up, but we have to take it with a lot of caution because there is speculation that there might be a second wave of the pandemic.”
Responding to the NNPC presentations, Faleke said: “the greatest problem that we have is cost of production by NNPC. It is such that an ordinary eye cannot see it. I know that we have a lot of issues in the Niger Delta region. Even the ones we are producing or the ones the oil companies are producing are hidden from us.
“We have written letters. The House passed a resolution investigating the $30 billion annual revenue leakages generally and we wrote to NAPIMS and till now, they find it difficult to give us data from 2010 till date. In other countries, they can roll it out with the press a button.
“From the data that has been submitted to us by other agencies, including banks and oil companies, we are able to tell you that there is no proper monitoring of our outflows in the oil industry. When we complete that analysis, we will let you see it. Can we come to a level when Nigeria can sit in a room and monitor its oil production?
However, Dr. Sam Omenka who represented the Director General of Budget Office said the NNPC has not been living up to expectations and has refused to pass their budget to the National Assembly through the Budget Office.
Omenka said: “Our expectation at the Budget Office is that all agencies of government should submit their budget to the National Assembly through the Budget Office. In the last few years, we have not been having that. That is important for us to know their revenue and expenditure as an agency of government just like others.
“What we have just done now is the projection that goes into the federations account. But in terms of their operation and that of their subsidiaries, we are hoping that they will stick to the rules and submit their budget to the budget office.”
