LCCI, CSJ Want FG to Stop Revenue Leakage to Foreign Ship Owners

Michael Olugbode in Abuja and Dike Onwuamaeze in Lagos

The Lagos Chamber of Commerce and Industry (LCCI) has called on the federal government to stop the $5 billion revenue leakage to foreign ship owners.

The call was made by the President of LCCI, Dr. Michael Olawale-Cole, in a letter to President Bola Ahmed Tinubu, which was titled the, “Representation of the Organised Private Sector by the LCCI.”

This was just as the Centre for Social Justice (CSJ), in a separate statement, also called on the federal government to take immediate action to block revenue leakages and implement measures to improve the economy without further delay.

The LCCI letter dated July 10, 2023, was made available to journalists yesterday in Lagos.

Olawale-Cole said: “While we commend the government on some of its recent measures to stop wasteful spending, we urge the administration to halt the revenue leakage of more than $5 billion paid as freight to foreign ship owners.”

The LCCI also shared its view on the proposed Nigerian Revenue Services (NRS) that would merge the Nigerian Maritime Administration and Safety Agency (NIMASA), Federal Inland Revenue Service (FIRS), and Nigeria Customs Services (NCS) into the NRS.

Olawale-Cole said: “We note with cautious concern the proposed merger of the NIMASA, FIRS and NCS) into the Nigerian Revenue Services (NRS).

“We understand the government’s arguments on the proposed merger, which borders on improving efficiency in collecting all direct and indirect taxes and levies.”

He, however, advised government to embrace critical stakeholders’ engagement and consultation, which would provide further insights into charter-specific responsibilities and possibilities in the proposed merger.

According to him, the LCCI supports the government’s desire to curb the rising cost of governance, including the government’s readiness to declare a state of emergency on revenue generation, and resolve to tackle them headlong.

But, he cautioned that, “the government should ensure that implementing of the proposed merger does not impede the ease of doing business.

“It would also be necessary for the government to ensure that the fallout of the proposed merger, such as staff rationalisation, realignment of operating structure, accountability, and transparency, are adequately dealt with.”

The LCCI also described the recent appointment of PwC’s Mr. Taiwo Oyedele as the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms established to remove barriers impeding business growth in Nigeria as a decisive affirmative action.

He said, “it is clear by this pronouncement that the president recognises the importance of a sound fiscal policy environment and an effective taxation system for the functioning of the government and the economy.

“The committee’s primary objective would be to enhance revenue collection efficiency, ensure transparent reporting, and promote the effective utilisation of tax and other revenues to boost citizens’ tax morale, foster a healthy tax culture, and drive voluntary compliance.” 

The president of the LCCI said the chamber was aware of the many challenges facing the country currently, and would, “commend all that the government is doing to resolve these issues and stabilise the economy. We only crave to see more results through efficient and timely implementation.

“The chamber, under my leadership, is available to work with the presidency with respect to policy formulation and implementation in the direction of a more robust economy for the nation. We look forward to seeing more policy interventions to promote an enabling environment for the private sector to thrive.”

 The LCCI also congratulated Tinubu on his appointment as the chairman of the Economic Community of West African States (ECOWAS), which it described as “a laudable feat and it is well deserved.”

Olawale-Cole said: “The LCCI recommends that under your able leadership, the issues that affect trade would be appropriately dealt with. A critical success factor would be to support the implementation of the eco (the proposed common currency for ECOWAS). This will ease the burden of payment and FX fluctuation and the attendant impact on trade.

“We are assured that your wealth of knowledge, commitment, and track record of governance and leadership will undoubtedly be a significant advantage as you tackle the challenges currently facing the region.

“It will be our pleasure and privilege to assist in whatever ways possible in ensuring your success as the ECOWAS Chairman and to actualise the dreams of ECOWAS.”

Relatedly, the CSJ called on the federal government to take immediate action to block revenue leakages and implement measures to improve the economy without further delay.

The call was made yesterday, on the heels of the interception of a vessel carrying stolen crude oil, with a capacity of 800,000 litres which was estimated at N45 billion.

The CSJ in a statement said only by curbing such criminal activities and ensuring accountability can Nigeria overcome its fiscal challenges and create a better future for its citizens.

 The NGO commended the Nigerian National Petroleum Company Limited (NNPCL) for the significant breakthrough in its ongoing efforts to combat oil theft and protect public revenue with Monday’s announcement of the successful interception of a vessel carrying stolen crude oil, with a capacity of 800,000 litres.

The Chief Corporate Communication Officer of NNPCL, Mr. Garba Deen Muhammad had disclosed that the interception was made possible due to credible intelligence received by the company, noting that a private security contractor engaged by NNPCL Limited, Messrs. Tantita Security Services, took swift action and apprehended the suspicious vessel, named MT Tura II (IMO number 6620462), on July 7, 2023.

The vessel, owned by HOLAB Maritime Services Limited, a Nigerian registered company with the Registration Number RC813311, was en route to Cameroon with the illicit cargo on board.

He also revealed that the captain and crew members were detained along with the vessel, with preliminary investigations revealing that the crude oil cargo was illegally sourced from an offshore well jacket in Ondo, Nigeria.

The CSJ based on the current price of $75 per barrel, the seized 800,000 litres of crude oil amounts to approximately $60 million. When converted at an exchange rate of N750 to $1, the value of the stolen crude oil equates to N45 billion.

The Centre said it was deeply concerned about this incident, particularly in light of Tinubu administration’s commitment to combating corruption and strengthening public finances, while lamenting that for the past two years, Nigeria has been unable to meet its OPEC production quota, largely due to rampant oil theft and pipeline vandalism in its Niger Delta.

The CSJ, in the statement added: “Nigeria’s debt burden is already significant, with the World Bank’s Nigeria Development Update of June 2023 reporting that public and publicly guaranteed debt reached 40 per cent of GDP in 2022.

“Additionally, the debt servicing to revenue ratio surpassed 100 percent of general government revenues for the first time, reaching 101.5 per cent. The World Bank projects that Nigeria’s debt servicing to revenue ratio will peak at 121 percent in 2023.

“In light of this precarious situation, it is imperative to prevent the loss of public revenue to criminal activities while citizens bear the brunt of increased taxes and economic challenges.

“CSJ strongly recommends that the perpetrators of these crimes be publicly named and brought to trial within a reasonable time to serve as a deterrent to others.

“Furthermore, CSJ advises the government against the traditional approach of burning intercepted vessels. Instead, the stolen crude oil should be salvaged to recover the value lost, the vessel sold and the proceeds transferred to the public treasury. These large-scale thefts of crude oil must not be allowed to persist if the government is to achieve its revenue targets and stabilise the economy.”

It lamented that the current economic conditions have already pushed an estimated four million Nigerians into poverty between December 2022 and April 2023 and seven million more may be pushed into poverty before the year ends (if the government fails to act to alleviate poverty), according to the World Bank.