The Federal Government has indicted some revenue-generating agencies, often regarded as ‘juicy’ parastatals, for squandering over N1 trillion on bogus salaries and allowances for their workers.
The government, which declared the situation as no longer acceptable, has resolved to bring the affected agencies to book and stop further wastage of public funds on unauthorised personnel emoluments.
The lid on the illegal activities of the agencies was blown open by the Minister of Finance, Mrs. Kemi Adeosun.
She accused the agencies of generating about N1.5 trillion yearly but spending 90 percent of it on recurrent expenditure of their workers.
Adeosun made the disclosure at the National Economic Council (NEC) meeting chaired by Vice President Yemi Osinbajo at the State House, Abuja.
The NEC meeting was attended by state governors, the Secretary to the Government of the Federation (SGF), Babachir Lawal, and the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu.
Briefing newsmen after the meeting, Anambra State Governor, Willie Obiano, explained that Adeosun briefed the NEC on the financial abuses being committed by the agencies.
The companies, he said, have been involved in the illegal acts in the last 10 years.
He said that “the Finance Ministry reported to the Council certain activities of some revenue-generating agencies that amounted to financial abuse of the revenues they generate.
The profligate spending of the agencies include paying salaries above Revenue Mobilisation and Fiscal Allocation Committee (RMFAC) specifications; converting official cars to personal ownership; monetising medical allowances arbitrarily; unapproved overseas’ trips; lavish training allowances, and excessive personal loan approval, including unapproved mortgages.
“The Ministry of Finance and RMFAC are working together to rein in these abuses as these revenue agencies raise as much as N1.5 trillion and spend almost 90 percent on their recurrent expenditure.
“The minister added that this has been going on for a decade, but such financial abuses whereby the agencies hide the revenues that ought to go to the Federation Account will now be exposed and terminated,” the governor said.
Adeosun also disclosed that the excess crude oil proceeds as at November 2016 stood at $2.4 billion, while budget support loan facility of $1.1 billion was disbursed in October to 35 states, making a total of $6.3 billion now released to the states.
On the N2 billion Ecological Fund said to be paid to states by the last administration, which some states complained they did not benefit from, the NEC resolved to investigate it and report its findings to the President.
Meanwhile, with the government’s decision to end its Joint Venture Cash (JVC) calls with oil companies next year, Kachikwu said that the country will attract investments in excess of $15 billion from the affected firms.
Kachikwu brought the proposal to change the funding configuration of JVC for upstream companies for endorsement by the NEC at its meeting on Thursday.
The minister told State House Correspondents after the NEC meeting that the current cash call arrears in the oil sector over the last five years up to December 2015 was about $6.8 billion, whereas as at 2016, the government had accumulated unpaid cash call arrears of over $2.5 billion.
The debts accumulated due to the failure to pay the joint cash calls when global crude oil price was selling for between $110 and $120 per barrel, he said, noting that it had now become difficult to pay them off as a result of the Niger Delta militancy and the drop in oil prices to $40 per barrel.
“When that happens, you find that your reserve begins to deplete, your ability to maintain production at current level will begin to dissipate and the cost of oil per barrel of production at joint ventures continues to rise because of the very little volumes chasing the cost and at the end of the day, the investors’ confidence begins to wane.“So, a lot of the projects that ought to have happened in this country were basically abandoned,” the minister said.
He said a sustainable solution to this has however been found by the Nigerian Petroleum Corporation (NNPC) and the Ministry of Petroleum.
According to him; “what we have been able to put together has enabled us to save over $1.7 billion for the government on the $6.8 billion that was previously owed. So, we are going to be owing only $5.1 billion as opposed to $6.8 billion.”
“The $5.1 billion will be paid within five years interest-free and the more funds will come from incremental barrels of oil generated by the oil companies apart from the current 2.2 million barrels”, Kachikwu explained.
He explained further that if for any reason the government did not meet the thresholds, it would not be able to pay the $5.1 and the $2.6 billion outstanding for this year.
Kachikwu added that he expected the barrel reserve production to increase to about 2.5 million by 2019 and potentially to about 3 million barrels by 2021.
Source: AUTHORITY