Money Palaver


The crisis between the federal, state and local governments reaches a boiling point over continued shortfall in revenue disbursements amidst report of increasing positive economic indicators


By Anayochukwu Agbo


Real trouble is brewing between the federal, state and local governments of the federation over what the governors call voodoo mathematics in the computation and sharing of the income of the federation. The federal government is finding it increasingly difficult to convince the federating units to continue to take cuts in their statutory allocations while the income side of the balance sheet is on green. For the August statutory allocation, which ought to have been shared on September 13, the shortfall was a whopping N140 billion, an equivalent of the budget of three non-oil producing states. However, the office of the accountant general of the federation, OAGF, confirmed that the shortfall was only N75 billion and that efforts were being made to get N75 billion from the NNPC to pay the shortfall.  For the same accounting period, the Central Bank of Nigeria, CBN, published receipt of N1.05 trillion, more than a fifth of the N4.98 trillion 2013 budget.


“So why do they say that there is no money?  If we received N1.05 trillion by July, why are they saying there is no money?” asked Chibuike  Amaechi, governor of Rivers State and chairman, Nigeria Governors’ Forum, NGF. Amaechi’s consternation is understandable. Rivers State was supposed to get N19 billion but to his chagrin the state was paid only N14 billion, showing a N5 billion underpayment.


The second Federal Account Allocation Committee, FAAC, meeting in two weeks ended in Abuja on September 23 in a stalemate because the federal government did not address the issues that caused the September 13 deadlock. Timothy Odaah, chairman, Forum of Commissioners for Finance of the states and commissioner for finance of Ebonyi State, reaffirmed the position of the states: “We told them not to invite us again until all issues are settled. Today the AGF called me that the minister asked him to preside... In fact; he (AGF) was more confused than anybody else. He said he wanted to let us know that there was no change. We asked him the need for the invitation and he said the minister asked him to invite us. The minister has chosen the part of playing levity with our case. He was reminded that he had always been asked by the minister to chair the meeting when there was any problem and he could not proffer any solution.”


As had become the case, when there was a shortfall, there was augmentation from Excess Crude Account, ECA, but this time the government said there would be no augmentation. This provoked the governors, and the NGF after a meeting chaired by Amaechi in Abuja called for the resignation of Ngozi Okonjo-Iweala, minister of finance and coordinating minister of the economy, if she could not manage the economy. The governors were miffed that the government was busy claiming a remarkable improvement in Nigeria’s economy globally while it could not meet its statutory obligations at home. To them it has to be one of two things – either the government is deceiving the world or it is stealing from the states. Many of the governors that spoke to the magazine believe it would be more of the latter. They feel that the so-called ‘shortfall’ may be feeding the slush fund being disbursed by two female ministers close to the President to fight the enemies of the government and advance Jonathan’s 2015 re-election bid.


This time, the states are insisting that it is no retreat, no surrender. According to Odaah, “We have imperative demands, augmentations and differentials in the benchmark, which we listed. The states rely on the budget in order to secure financial commitment and handle security issues and issues of contractors. We have issues of insecurity, among others. Just clear the backlog and we will get along.”


This backlog is put at N336 billion. The federal government confirmed it provided N548.393 billion as the statutory revenue for the three tiers of government for the month of September, an improvement over the N497.984 billion shared in August.  In January, it provided N651.26 billion, N571.7 billion in February and N595.71 billion in March. In April it was N621.07 billion; N590.77 billion in May; N863.02 billion in June and N497.98 billion in July. Projected monthly revenue for 2013 is N702.54 billion, which was only surpassed in June by N160.48 billion.  For that month, N718.103 billion was approved for sharing but only N623.767 billion was disbursed.


The increase in revenue in June “was due to an increase in crude oil production due to completion of pipeline repairs in some terminals and the rush to meet the Company Income Tax (CIT) deadline of 30th June, 2013 for companies with 31st December, 2013 year end,” Lawan Ngama, minister of state for finance and chairman of FAAC, had explained. So the expectation of the governors was that revenue should continue to go up not down.


According to the revenue sharing formula, the federal government gets 52.68 per cent; state governments get 26.72 per cent while the 774 local governments get 20.6 per cent of the statutory disbursements.


'The OAGF said FAAC had received assurances from the NNPC that the issue was being dealt with with dispatch and that a positive outcome was expected soon. It also said that the government was exploring all avenues to end the shortfalls in revenue caused by oil theft and vandalism as soon as possible” explained Charles Nwodo, deputy director corporate affairs in the OAGF.


To avoid further crisis, Ngama said revenues would from October be shared on the basis of the actual amount earned rather than what was budgeted.


A statement by the Nigerian National Petroleum Corporation, NNPC, on September 22, signed by Tumini Green, acting group general manager, group public affairs division, once again confirmed that oil production is on the increase. Vandalism of three major trunk lines – Trans Niger pipeline, the Nembe Greek pipeline and the Tebidaba-Brass pipeline – by crude oil thieves had led to the shut-in of between 3,800 to 400,000 barrels daily. Green confirmed that the three important pipelines have been restored due to the great work done by the Security Strategy Committee, SSC, set up by Dieziani Alison-Madueke, minister of petroleum, headed by Emmanuel Uduaghan, Delta State governor. The magazine confirmed last week that production had gone up to above 2.3 million barrels daily but that government is being cautious and wants a certain level of stability to make this public. “The feat recorded by the honourable minister will enhance increased production and shore up the revenue accruing to the country,” Green re-affirmed. He confirmed that production is now at 2.4million barrels per day.


The National Economic Council recently approved N15 billion for adequate policing of oil and gas installations in the Niger Delta region to stem crude oil theft.


A presidential aide confirmed to the magazine last week that there were, indeed, challenges for the country but that the economy is very sound. “When you are building, there have to be opportunity costs; that’s what the governors should understand but the opposition is pushing them to over-react. The PDP crisis is also affecting how the governors view the government’s actions,” he regretted.


The persistent distrust and suspicion of the governors that the federal government is consistently shortchanging the states, as the centre controlled all the officers that computed the Federation Account, has led to the proposed amendment of the 1999 Constitution for the separation of the office of the accountant general of the federation and that of accountant general of the federal government.