- Saraki: $6bn JV cash call debt threatens economy
- Adeosun to appear before Senate thursday
- Naira sustains slide on parallel market
Ndubuisi Francis, Omololu Ogunmade, Chineme Okafor in Abuja and Obinna Chima in Lagos
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.
“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.
“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.
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.
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.