Senate Queries Planned Diversion of N14.3bn NEPZA fund
The Senate Committee on Trade and Investment has queried the planned diversion of N14.37 billion meant for Nigeria Export Processing Zones Authority (NEPZA) to the Nigeria Special Economic Zone Investment Company Limited (NSEZCO), Economic Confidential can report.
In letters dated January 8th, 2019 and addressed to both the Minister of Finance and Accountant General of the Federation ref. NASS/S/C/T/I/R/M/I/19/I and signed by Chairman of the Committee, Senator Sabo N. Mohammed, the senate had warned that tampering with the stated funds meant for NEPZA for its 2017 capital projects would attract appropriate legislative sanctions and actions by the committee.
The Senate in their letter noted that the planned diversion of NEPZA fund was discovered during their oversight tour of the agency to cross-check the implementation of 2017/2018 budget and saw the approval of the federal Executive Council (FEC) to transfer the sum of N14.37bn to NSEZCO account, adding that the approval given was in error.
Further checks revealed that the Senate Committee on Trade and Investment as part of efforts to stop the transfer, had written to the Accountant General of the Federation, Alhaji Ahmed Idris, stopping the amount to be released to NSEZCO, stating that the fund should be released only to NEPZA.
The letter, which was received in the minister’s office on January 9, read in part, “The committee noted that NEPZA as a Federal Government agency had the legal authority to execute all capital projects concerning free zones in Nigeria.
“The N48.21bn budgeted for NEPZA capital projects in the 2017 appropriation is not an intervention fund.
“The June 27, 2018 approval of the FEC was given in error. The N14.37bn appropriated for NEPZA in the 2017 appropriation Act, which was withheld (should) be released to the agency to enable it to implement its constitutional responsibilities without further delay.”
At the onset of the present administration, Government had set up NSEZCO as a special purpose vehicle for participating in Public-Private Partnerships involving Federal and State governments and local and foreign private investors to develop new Special Economic Zones across the country.
The projects in the pilot phase include Enyimba Economic City, Funtua Cotton Cluster and Lekki Model Industrial Park.
Investigations within NEPZA, Ministry and trade experts further show that it was not within the ambit of the law for the N14.37bn to be appropriated to NSEZCO for the development of special economic zones as the mandate for such development was the responsibility of NEPZA, adding that it was wrong to allocate funds to NSEZCO as it was a private entity not created by an Act of the National Assembly.
An official of the ministry who pleaded anonymity said, “One of the factors to be considered is the legal status of NSEZCO as the name appears to be a private limited liability company registered under the Companies and Allied Matters Act with the Corporate Affairs Commission.
“It is not a creation of any Act of the National Assembly and regardless of whom the shareholder may be, it remains a private limited company.
“It is, therefore, wrong to contemplate that the National Assembly would appropriate funds to a private limited company to execute national projects.”
The trade and investment committee of the senate further stated that the approval of the fund by FEC might have been given in error as there was no budgetary provision for such amount to be transferred to NSEZCO in the 2018 budget.
Economic Confidential also learnt that the federal government had planned the sum of N250 billion to be spent for the development of Special Economic Zones (SEZs) across the country and that it would be captured in the budget over some years.
However, the sum of N46.17 billion was included in the 2017 budget of the Nigeria Export Processing Zones Authority (NEPZA) for upgrading and establishment of new SEZs. NEPZA’s 2018 budget also captured almost N40 billion for the same purpose and there is also another provision of N42 billion in the 2019 appropriation bill before the National Assembly.
Some top government officials who confided in our correspondent noted that NEPZA had initiated the processing of upgrading and establishing new industrial parks also known as SEZs across the country as indicated in the budget before an instruction from the minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, that part of the fund should be transferred to a private company, leading to the current controversy.
Documents sighted by Economic Confidential indicated that the minister wrote to his Finance counterpart requesting for the transfer of 2017 appropriated funds for MINE project to the private company and in November, the Office of the Accountant General of the Federation wrote to NEPZA requesting “disposal instruction” to transfer N14.38 billion to the company as requested by the minister.
The immediate past Managing Director of NEPZA, Barrister Emmanuel Jime, who is now the Governorship candidate of the All Progressive Congress in Benue State sought the advice of the Attorney-General of the Federation (AGF) and Minster of Justice on the legality of allowing the minster transfer funds budgeted for NEPZA’s capital projects into a private company’s account.
Checks further reveal that the AGF had to rely on the explanation from the trade minister on the controversy and the Justice Minister’s response indicated that NEPZA had misrepresented facts aimed at stalling the MINE project.
Trade and Investment Minister Dr. Okechukwu Enelamah said the funds allocated in NEPZA’s budgets were for MINE project and were only “domiciled” in NEPZA for ease of appropriation and not for NEPZA to implement the project itself.
The minister also explained in his letter to the attorney general that the Nigeria Special Economic Zones Company (NSEZCO), to which he requested a transfer of N14.38 billion to be made, was created as the vehicle for the implementation of MINE project.
The Attorney General of the Federation (AGF), Abubakar Malami, advised NEPZA not to frustrate the transfer of the funds “in seeking to retain such funds on technical interpretation of the NEPZA Act.”
Checks by Economic Confidential further showed that at NEPZA’s budget defense before the National Assembly for the year 2018, NSEZCO was not there to defend any Executive Bill proposal or provision and NEPZA said as at 2017 and 2018, NSEZCO was not in existence; neither was it known to the Budget Office of the Federation nor even the Trade Ministry as it was incorporated on June 12, 2018.
The source also said “It is therefore unusual to claim those line item funds under NEPZA belonged to NSEZCO as it is a private company incorporated under the Corporate Affairs Commission while NEPZA is a creation of the Law vide NEPZA Act 63 of 1992 as amended,”.
Meanwhile, the Association of Senior Civil Servants of Nigeria has written and drawn the attention of President Muhammadu Buhari to the development describing it as “a fraud”.
“The minister, in his desperate move to achieve his unpatriotic objective is already transferring the fund appropriated and deposited into NEPZA Project account with CBN into a new account to be opened with CBN in the name of an SPV company which is not a product of any legislation,” the letter read.
