- Saraki: $6bn JV cash call debt threatens economy
- Adeosun to appear before Senate thursday
- Naira sustains slide on parallel market
The grim reality of a depressed economy
appears to be staring many ministries, departments and agencies (MDAs)
of the federal government in the face, as they are hamstrung by paucity
of funds to meet their obligations, including recurrent expenditure.
The cash crunch may not be unconnected
to the disclosure by the Secretary to the Government of the Federation
(SGF), Babachir Lawal, to the Senate recently that there has been a 40
per cent drop in revenue in the last five months largely due to the
activities of militants in the Niger Delta.
At the 2016 budget breakdown on May 12,
the Minister of Budget and National Planning, Senator Udoma Udo Udoma,
and his finance ministry counterpart, Mrs. Kemi Adeosun, had assured
Nigerians that the release of N350 billion slated for capital projects
would commence the next day.
When the promise was not kept, Udoma had
explained that the delay was informed by the resolve of the incumbent
administration to religiously embrace due process.
But the Minister of State, Budget and
National Planning, Mrs. Zainab Ahmed, a few weeks ago disclosed that of
the N350 billion, N280 billion had been released to six ministries and
about 50 or 60 agencies.
She named the beneficiaries as the
Ministries of Power, Works and Housing, Agriculture, Interior,
Education, Information, and Environment, but the name of the agencies
were not disclosed.
THISDAY investigations revealed that
outside the N350 billion earmarked for capital projects in order to
reflate the economy, many MDAs are currently unable to meet their
recurrent obligations.
A top official of one of the ministries
told THISDAY that for over two months, his ministry had not received any
funds for recurrent expenditure, thereby making it near impossible to
meet crucial overheads.
He expressed concern that the situation
was grim, adding that if the release of funds for recurrent expenditure
was posing a problem, that of capital votes was almost hopeless.
Echoing the same sentiment, the chief
executive of one of the top agencies disclosed that his agency actually
received some funds to meet pressing recurrent obligations, which fell
short of the agency’s needs.
According to him, the agency was still
expecting some funds for about a month, which had not been forthcoming.
The situation appears to be the same in many MDAs.
While the cash crunch bites, the
military is not left out as the Nigerian Navy, Army, and Air Force are
also reeling from the absence of funding for capital expenditure.
It was also unclear how much the six
ministries that benefitted from the N280 billion got, as officials of
the Ministry of Power, Works, and Housing, for instance, were evasive as
to whether or not they actually got funds for capital projects.
However, a terse statement made
available to THISDAY after much prodding, said the federal government
had released funds to finance ongoing capital projects across the
country.
The statement quoted the Minister of
Power, Works and Housing, Babatunde Fashola, to have said this, as well
as speaking on the resumption of work by contractors at various federal
highways.
It was signed by Olusegun Ogunkayode, a
senior information officer in the ministry, and explained that Fashola
made this known while delivering a keynote address at an insurance
conference organised by the Insurance Industry Consultative Council in
Abuja to mark the 2016 annual National Insurance Conference.
Fashola, according to the statement,
said that with the information available to him, the contractors
handling various types of road projects left the construction sites
about three years ago because they were being owed by the government.
He stated that they had now been paid
and work resumed fully in those affected locations like the Lagos-Ibadan
Expressway, which was stalled by lack of payment and legal issues.
On the government’s pledge to pay the
backlog of debt owed road contractors, THISDAY learnt that some of the
contractors, mainly big players like Julius Berger, RCC, Dantata and
Sawoe had been paid part of what is owed them, while others were yet to
get paid.
When contacted, Mr. Solomon Ogunbusola,
President of the Federation of the Construction Industry, an umbrella
body for construction companies in the country, refused to take his
calls or respond to a text message.
The Federal Road Maintenance Agency
(FERMA) on its part said it was relying on the ministry to undertake its
job of repairing dilapidated federal roads across the country.
The agency said the ministry was
comprehensively in charge of everything related to roads in the country
and that it would align with whatever plans the ministry has.
But information available to THISDAY
indicated that some of the federal roads that are in a terrible state of
disrepair were yet to get funds for their repairs.
They include the Lokoja-Okene-Okpella, Lagos-Ore, Enugu-Umuahia, Enugu-Onitsha and Enugu-Port Harcourt roads, among others.
Unpaid Cash Calls
Even as the MDAs reel from the absence
of funding for the recurrent and capital projects, Senate President
Bukola Saraki warned yesterday that the Nigerian National Petroleum
Corporation’s (NNPC) joint venture cash call debt, which stands at $6
billion, was a threat to Nigeria’s worsening economy.
Saraki made the remark while declaring
open a one-day public hearing on the urgent need for effective
implementation of the joint venture cash call obligations by the NNPC in
accordance with the Appropriation Act of the National Assembly. The
hearing was organised by the Senate Committee on Gas.
Saraki, in his remarks, recalled that
the 2013 Nigeria Extractive Industry Transparency Initiative (NEITI)
report submitted to the Senate in June revealed that about $12.9 billion
was not remitted to the federation account by the NNPC, adding that
debt of that magnitude at a time Nigeria’s oil and gas installations are
being blown up by militants was a time bomb requiring critical
attention.
Saraki expressed concern that whereas
most oil producing countries which commenced oil exploration alongside
Nigeria had succeeded in paving their streets with durable
infrastructure, Nigeria’s situation was a tragic one.
He tasked the committee to unravel NNPC’s joint venture cash call arrears, submitting that part of the agenda of the Eighth Senate was to block leakages and expose corruption and waste in government operations.
He tasked the committee to unravel NNPC’s joint venture cash call arrears, submitting that part of the agenda of the Eighth Senate was to block leakages and expose corruption and waste in government operations.
“While most oil producing countries that
started exploration at about the same period as we did like Norway,
Brazil, Saudi Arabia, Kuwait, Qatar, Malaysia and the UAE have efficient
and reliable infrastructure with sustainable industrial growth,
Nigeria’s case reflects a paradox of these ideals.
“It is my delight to declare this public
hearing open by the Senate joint Committees on Gas, Finance,
Appropriation and Petroleum Resources Upstream which has the onerous
task of unravelling the operations of the Nigerian National Petroleum
Corporation (NNPC) Joint Venture Cash Call obligations.
“As part of our legislative agenda in
the Eighth Senate, we set amongst others, a mandate to block economic
leakages, and improve on our constitutional powers of investigating
ministries, departments and agencies of government with a view to
exposing corruption, inefficiency and waste in the conduct of government
business.
“As a responsible arm of government with the hopes of millions of Nigerians resting on our shoulders, we are disturbed by the frequent distortions that keep coming out of the oil and gas industry.
“As a responsible arm of government with the hopes of millions of Nigerians resting on our shoulders, we are disturbed by the frequent distortions that keep coming out of the oil and gas industry.
“Despite the fact that NNPC has a larger
amount of the proceeds from the joint ventures, it worries the
parliament to know that it has consistently been defaulting on payments
of its own counterpart funding of projects.
“There is no doubt also that there is
still lack of clarity in the current financial regimes, royalties and
taxes in the oil and gas industry. The NNPC is expected to lead in
public disclosure of its financial dealings, earnings and expenditure.
“This is vivid with the confusing and
conflicting figures reeled out during the reconciliation process among
the agencies responsible for the receipts of funds meant for the
Federation Account,” Saraki said.
Also wednesday, the Minister of Finance,
Mrs. Adeosun, failed to appear before the Senate as scheduled to brief
the senators on the state of the nation’s economy.
Adeosun instead, sent a message to the
Senate that she would be unable to appear at yesterday’s plenary because
she had to attend the Federal Executive Council (FEC) meeting.
But her media aide, Mr. Festus Akanbi,
disclosed yesterday evening that the minister later rushed to the Senate
immediately after the FEC meeting but plenary had been adjourned.
“She, however, met with the Senate leadership and pleaded with them to allow her to brief the senators today on the economy,” Akanbi said.
“She, however, met with the Senate leadership and pleaded with them to allow her to brief the senators today on the economy,” Akanbi said.
Naira Falls to N375/$1
But as the Senate president opened the
public hearing, there was more cause for concern over the economy as the
naira sustained its slide against the US dollar on the parallel market,
where it shed N7 in one day to close at N375 to a dollar yesterday,
lower than N368 from the previous day.
With yesterday’s drop, the nation’s currency has lost N10 on the parallel market since Monday.
However, the naira appreciated slightly on the interbank FX market, where it closed at N294.24 to a dollar yesterday, up from the N294.57 on Tuesday.
However, the naira appreciated slightly on the interbank FX market, where it closed at N294.24 to a dollar yesterday, up from the N294.57 on Tuesday.
Dealers attributed the pressure on the
naira on the informal market to the scarcity of FX brought on by the
decision of the Central Bank of Nigeria (CBN) not to intervene in the
interbank market.
The central bank last Friday decided to
allow the exchange rate of naira to be market-determined without its
intervention to peg the currency.
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