War in FAAC

•NNPC should open its book for public
scrutiny; states should develop their IGR to
reduce dependence on federation account
Nothing better illustrates the dependent nature
of the nation’s federalism than the perennial
row between the 36 states and the Federal
Government, over the sharing of national
revenue. On September 13, the Federal
Accounts Allocation Committee (FAAC) meeting
held to consider and approve the statutory
distribution of revenue for the month of
August ended in a deadlock. Again, on Monday,
last week, another meeting also ended similarly
without the issue being resolved.
At the heart of the dispute is the N140 billion
shortfall – an amount representing the
differential between the projected revenue and
the actual revenue earned for the first seven
months of the year. The Office of the
Accountant-General of the Federation had after
the botched Monday meeting issued a
statement that efforts were being made to get
N75bn from the NNPC to pay the shortfall.
The issue revolves around the projected
revenue of N702.54bn for the three tiers of
government in the 2013 Appropriation Act. In
January, the three tiers could only realise
N651.26bn revenue; February was even worse
with only N571.7bn netted into the treasury.
Although a modest improvement was recorded
in March with N595.71bn, it was mixed
fortune for the four months of April, May,
June and July: the revenues came to
N621.07bn, N590.77bn, N863.02bn and
N497.98bn, respectively. That development
prompted the Minister of State for Finance,
Dr. Yerima Ngama, to announce earlier in the
month that revenues would, from October, be
shared on the basis of actual amount earned
rather than what was budgeted.
We must say here that the best argument that
the states have made for pushing their position
is that the budget instrument – the 2013
Appropriation Act –lays out the basis for the
revenue accrual based on production volume
and the benchmark price for the nation’s
crude. While that law assumes that production
and price would go pari pasu, the reality
however is that production has fallen short
due to massive oil theft and associated
production shut-ins.
Asking the Federal Government to carry the
can – or asking that the shortfalls be charged
to the Excess Crude Account (ECA), as the
states are wont to do, vide their demand for
augmentation of the shortfalls, in our view,
skirts around the issue. Suppose there was
nothing in the ECA, would the states still have
demanded augmentation from the Federal
Government?
The primary challenge is to stop the menace of
oil theft or at least reduce it to the barest
minimum. The challenge is beyond the ad-hoc
committee for the mitigation of oil theft
headed by the Delta State Governor, Emmanuel
Uduaghan. A more permanent framework for
dealing with the menace is what is
recommended, which unfortunately, the
Federal Government appears to lack the nerve
to undertake.
Once again, the development has brought into
sharp focus the activities of the Nigerian
National Petroleum Corporation (NNPC),
particularly its opaque accounting responsible
for short-changing of the federation account.
What we have today is a national oil
corporation that sees itself as not answerable
to anyone; one that does as it pleases and one
with such immense powers as to be able to
hold the beneficiaries of the federation
account, save the Federal Government, to
ransom. FAAC members obviously need to do
more than the loud, occasional whispers only
in the event of shortfalls at their monthly
meetings. We expect them to put greater
pressure on the National Assembly to get the
NNPC to throw its book open for better
scrutiny since attempts to get it to act
responsibly have met with a brick wall.
The greatest lesson from the ruckus is the
need for the states to grow their internally
generated revenues to wean their dependence
off the federation account. Relying on the
federation account to pay salaries and
remuneration of staff is not only unhealthy; it
is the surest recipe for disaster, as the states
may have learnt to their regret in the last few
weeks.