THE reality of September 23rd, 2013 has dawned on state governments. They found it hard to believe that they could come to Abuja to collect their federal allocation, and left empty handed. There was no cash to share as the monthly Federal Allocation and Appropriation Committee (FAAC) was aborted the second time.
Today, governance and management in almost all the states seem to be going in a slow motion as late payment of allocation from the FAAC has crippled activities. The situation was aggravated when the Finance Minister, Dr. Ngozi Okonjo-Iweala, admitted there was no money to pay state government allocations in full.
But the Director-General of Budget Office, Mr. Bright Okogwu and his colleague, the Accountant-General of the Federation, Mr. Jonah Otunla, came out to say the country Nigeria was not bankrupt. “Nigeria is not broke but it is having cash flow problems,” Otunla had responded to questions put to him recently by the House Committee on Appropriation and Finance.
Yet, available records from the National Bureau of Statistics (NBS), the Nigerian Extractive Industries Transparency Initiative (NEITI), and the International Energy Agency (IEA) point to the fact that government revenue has fallen below expectation. The records reveal that oil production which is the chief source of government revenue, in the last 10 months, hovered between 1.9 million barrels per day (bpd) and 2.2 million barrels per day (bpd) as against the standard 2.5million barrels per day (bpd). This threshold is the lowest since the 1.5 million bpd in 2009 when the nation was producing at the height of insurgency in the Niger Delta.
This fact was corroborated by the Governor of Niger State, Dr. Mua’zu Babangida Aliyu at the 3rd MBA International Literary Colloquium. He attributed the slow growth of Nigeria’s Gross Domestic Product to 1.9 million barrels per day oil output being realised daily. This he said is 6 million barrels below the 2013 budget estimate that is based on 2.5 million barrels per day. As a result of the drop in revenue, monthly allocations by the Federal Government to the 36 states of the federation has also dropped drastically, leading to the unfolding cash crunch in running state affairs.
However, this drastic drop in revenue is being linked with the alleged massive theft of oil in the Niger Delta.
In order to stem the tide, some state governments are looking inwards to increase their Internally Generated Revenue. Though some them claimed they had devised means of keeping government’s activities running, others had been finding it difficult to cope under the condition. Yet all seems not to be well with the modus operandi of some of the revenue drives as most states have introduced multiple taxes that have again pitched them against the federal government. Businesses and individuals often cry out that they were suffocating under the weight of illegal and multiple taxes imposed by states and local governments. The new tax policy now specifies eight types of taxes that are collectible at the federal level, 11 taxes at state level and 20 at local government level. This will reduce the number of taxes chargeable by states like Lagos, which is alleged to have over 90 different taxes according to a senior partner at Ukutt Chambers, Mr. Victor Ukutt .
In an interview with Sunday Tribune, Ukutt agreed that the issue with Lagos State and its taxation was that most of them were legal and illegal.
He was confident that Lagos could make all the money from legal taxations without necessarily creating more illegal ones.
Analysts are worried that the crisis is deepening by the day with the increasing strikes by essential workers in the education, health and other critical sectors of the economy.
In Akwa Ibom State, the Commissioner for Finance, Mr. Bassey Akpan was quoted as saying that the state government got a loan of N80 billion from Standard Chartered Bank of London to support the state government to fulfil its financial obligations.
Governor Babatunde Fashola of Lagos State attributed inability of the state government to actualise its budget implementation to delay in remittances of FAAC to the state.
“As far as I am aware, not all of it has probably come from the last report that I got. So, it puts our planning into some distortions.
“We expect that as a country, we cannot continue to have this distortion in revenue collection and projection where the largest source of revenue comes from a single item. What it simply means is that we use revenue from our Internally Generated Revenue (IGR) that we should have used to pay contractors to keep the public service going. So, that distorts so many things,” he said.
Speaking on the state of finance in the state recently, Governor Emmanuel Uduaghan of Delta State said despite the uncertainty surrounding the disbursement of funds from the Federation Account, governance in the state had not come to a halt, as governance was being run and civil servants were being paid their salaries regularly.
While insisting that the state was not broke as being rumoured, Uduaghan hinted that only contractors executing projects in the state were being owed.
Also, the state had resorted to placing high taxes on workers’ salaries. This prompted the Joint leadership of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), Delta State chapters, to wade into the matter. They had only soft-pedalled on threats to down tools over alleged taxation on workers’ salaries, partial implementation of minimum wage, among other issues.
Massive oil theft in Niger Delta
Meanwhile, the fight by the Federal Government against crude oil theft appears fruitless, just as the Federal Government has called on its International partners to help fight the menace.
In what appears to be government’s helplessness on the issue, a major and frequent attack on Shell’s Nembe-Creek Trunk Line (NCTL) has forced the company to put up the pipeline for sale.
Over the past year, the Nembe Creek line has had multiple punctures and closures, and at least one fire. A report by a United Kingdom-based Chattam House suggested that, “It is not clear how much of Nigeria’s oil is stolen and exported. The best available data suggest that an average of 100,000 b/d vanished from onshore, swamp and shallow-water areas in the first quarter of 2013.
“This figure does not include what may happen at export terminals. It also assumes the integrity of industry numbers. Poor governance has encouraged violent opportunism around oil and opened doors for organised crime.
“Because Nigeria is the world’s 13th largest oil producer – exports often topped two million barrels per day in 2012 – high rents are up for grabs.”
On the countries in which Nigeria’s stolen crude oil ends up, Chatham House identified the United States of America, West Africa – some of Nigeria’s neighbours in the Gulf of Guinea, Brazil, China, Singapore, Thailand, Indonesia, Ukraine, Kosovo, Bulgaria, Romania and Greece, as possible recipients of Nigeria’s stolen crude.
The theft, the report shows, is perpetuated by mainly Nigerians and is aided and abetted by foreigners from Russia, the Philippines, Ghana, Georgia, Romania, Greece, Ukraine and Cameroun.
The group managing director of the Nigerian National Petroleum Corporation (NNPC), Engr. Andrew
Yakubu, has admitted that the persistent attacks on major crude oil arteries are having a negative impact on the nation’s revenue.
Source: Tribune
