THE National Economic Council (NEC) was on Thursday told that some federal revenue generating agencies were hiding revenue or engaged in unauthorised spending of money that was supposed to be remitted to the federation account.
Minister of Finance, Kemi Adeosun, who raised the alarm at the meeting of NEC presided over by Vice President Yemi Osinbajo at the Presidential Villa, informed the council that such infraction has been going on for a long time.
According to Governor Willy Obiano of Anambra State who briefed State House corespondents on the outcome of the NEC meeting, the Finance minister told NEC that the activities of the agencies amounted to financial abuse.
He said: “The long term financial abuse by some revenue generating agencies was taken at the council.
“The finance ministry reported to the council certain activities of some revenue generating agencies that amounted to financial abuse of the revenue they generate.
“They include paying salaries above Revenue Mobilisation Financial Accounts Committee specifications, converting official cars to personal ownership, monitising medical allowances arbitrarily, unapproved overseas travels, lavished training allowances, excessive personal loan approval including unapproved mortgages.”
He assured that the ministry of finance and the Revenue Mobilization, Allocation and Fiscal Accounts Commission (RMAFC) were working together to “rein in these abuses as these revenue agencies raise as much as N1.5trillion and spend almost 90 percent on its recurrent expenditure.”
Obiano stated that NEC was told that even though the act has been going on for a decade “but such financial abuses whereby the agencies hide the revenues that ought to go to the federation accounts will now be exposed and terminated.”
On Excess Crude Account, Obiano who briefed corespondents alongside his Bauchi State counterpart, Abubakar Mohammed and the Minister of State for Petroleum Resources, Ibe Kachikwu, said that the balance of the account presented by the Minister of Finance showed that it stood at $2.4 billion as at November 2016.
He added that the sum of $1.1billion was disbursed in the month of October to 35 states and a total of $6.3billion has now been disbursed to each of the 35 states.
On Ecological fund, he said N2billion was said to have been paid to the states by the last administration.
“However, some states did complain that they did not have equal share of the money or even got anything at all. The reason why that occurred will be investigated and report made available to the president,” he added.
In his remark, the Minister of State for Petroleum Resources revealed that NEC endorsed a new funding regime for the oil and gas industry, eliminating Cash Call regime and thereby saving that country at least $1billion from next year.
According to Kachikwu, beginning from 2017, the issue of Cash Call era would would disappear and “the effect of what this is that investments in excess close to $15billion are likely to be announced by the oil companies bringing back most back most of the project within couple of weeks.”
He stated that the current upstream Joint Venture arrangement in the Nigeria’s oil and gas industry was unincorporated Joint Venture (UJV) meaning that NNPC and the International Oil Companies (IOCs) partner in each Joint Venture as unique and separate legal entities.
The Minister also noted that while the NNPC pays the entire Oil and Gas revenues realized from the JV operations into the Federation account, the production costs are appropriated, calendarized and paid monthly as Cash Calls to the JV operations from the NNPC and IOCs.
He said January – November 2016 underfunding of the NNPC Cash Calls is estimated at US$2.3 billion, noting that This is in addition to the inherited arrears estimated at USD$6.8 billion for year ending 2015.
However, he disclosed that through negotiations the $6.8billion past due Cash Calls burden on the Federation has now been reduced to $5.1B, which would be paid based on an improved oil production output.
Under the new funding stream, h explained, the JVs would become incorporated and source for their own financing, freeing-up the federal government from the budgetary obligations of coming up with the Cash Calls already put at $2.3B so far this year alone.
He added: “For the first time the oil industry will take responsibility for arranging their own funding and being able to produce oil and save the federal government the whole nightmare of cash calls every year.
“So, this is a very dramatic move in the oil industry we are still going to make presentation to the National Assembly for them to understand this.”
He also spoke of plan to reduce the cost of crude oil production in Nigeria, saying: “We will be looking at reducing the cost of barrel per production from the current $27 per barrel which is one of the highest in the world to figure within the threshold of $18 per barrel over the next two years and ultimately, to about $15 over the next four years.
“The barrel reserve production should increase to about 2.5 by 2019 and potentially to about 3million barrels by 2021. So, there will dramatic effects.”