Oil Revenue Leakages: Another Chance for Nigeria, By Nasir Ahmad El-Rufai

Nasir El-Rufai

The Presidential Economic Team of 2003 to 2007 which I was privileged to be a member had a running joke – that the NNPC was an independent federal republic on its own totally separate from and way superior to the Nigeria we all worked for! This joke was our way of criticising the way and manner the NNPC not only sells crude oil as an agent on behalf of the government of the federation as in its enabling law, but even then felt entitled to spend as much of the proceeds of sale as it deemed fit.

The NNPC had begun then to be a law unto itself, outside our national laws and above the constitution, hence our joke. Recent revelations of oil revenue leakages have confirmed that this is a joke that has turned into a macabre reality. Our nation’s finances are in grave danger of becoming zero due to the conduct of a rogue institution that has become more powerful than its principal under Jonathan’s watch.

For a country dependent on oil revenues for most of its income, Nigeria cannot claim to have exercised the closest scrutiny on this vital resource. At least not in recent times. As bad as this gross neglect has been, it is surpassed by the failure to seize the moments that have also been presented to the country in recent times to restore some sanity and integrity to the collection and remittance of revenues. The conversation around the sudden explosion in the fuel subsidy payments from N300bn in 2009 to over N2 trillion in 2011, the protests around the removal of petrol subsidy in January 2012, and the subsequent investigations into the scandal regrettably did not coalesce into a new deal on revenue management or sanctions for the beneficiaries of the obvious fraud!

Another such opportunity to clarify compliance with the constitution, law and due process in the collection and remittance of oil revenues has been presented by the rolling revelations made by brother CBN governor Sanusi Lamido Sanusi. It is a moment the whole country should seize, so that public confidence can be restored in the operations of the NNPC and integrity of the revenue remittance process. But to get there and understand the issues clearly, let’s summarise the constitutional position, the law and the factual contentions.

Our constitution is very clear in sections 80, 81, 82 and 162 in requiring that all revenues are to be paid into the federation account for distribution to various tiers of government in accordance with the provisions of the constitution and the revenue allocation act. No institution or person can spend a kobo on fuel subsidy or pipelines repairs from these revenues without the funds being first paid into the federation account, and then subjected to due appropriation by the National Assembly.  Any spending outside this lawful framework is a case of an agent not accounting honestly for proceeds of sale to a principal. In everyday language, that illegal conversion is called theft, pure and simple, and in violation of the constitution. No one, whether it be NNPC or the Jonathan spin-masters should be allowed to obscure this clear legal position.

Now, what are the facts surrounding the latest case of non-remittance of federation revenues?

In a letter to the president in September last year, Sanusi expressed concerns about the non-remittance of $49.804 billion, monies due to the federation account from crude oil sales. Until December when the letter became public, neither the presidency nor the NNPC responded to the issues, believing like every other instance of corruption allegation, the matter will die a natural death over time. Internally, within the Jonathan administration, no clear action was found to have been taken to cross-check the veracity of CBN’s concerns about the NNPC owing the federation account some N8 trillion.

The NNPC demurred only when these concerns became public, insisting it was not owing the federation account. When all the parties – CBN, NNPC and the Federal Ministry of Finance – met to reconcile accounts, it was agreed that indeed some funds had not been accounted for and may need further reconciliation. The outstanding sum amounted to $10.8bn (according to NNPC and Ministry of Finance on one side) or $12bn, according to the CBN. Further to this, the NNPC then came up with another afterthought – that it had spent the $10.8bn on gasoline and kerosene subsidy payments, repairs of vandalised pipelines and operational costs.  It did not appear that anyone believed the NNPC, on its use of the money, its right to withhold the money in the first place and its initial denial of owing the federation account.

The CBN is obviously one of those not buying the NNPC’s explanation. This week, the apex bank raised the figure of non-remitted funds to $20bn, including the $12bn outstanding from the reconciliation. The balance includes $6bn worth of crude oil NNPC shipped for the NPDC its upstream subsidiary, and another $2bn from “third-party” financing.

What has been lost in the emotions unleashed by these series of disclosures are the substance of the issue, and the caveats inserted by the CBN governor. His letter to the president and public statements are drawing attention to the non-remittance or non-repatriation of funds to the Federation Account. There was no claim then that these monies are missing, at least not yet. That will be beyond the CBN’s brief. But as the banker to the government, the CBN is within its mandate to declare what sums it has received in relation to the funds expected. The onus is thus on the NNPC to explain why these monies have not been remitted or why they cannot be remitted, and point to the laws that permit them to so act. Anything other than this is admission of theft of federation account proceeds and the 36 states and their local governments should act to recover the amounts, if the Jonathan administration does not.

It is my view that the NNPC have to quickly refund the amounts or prove the numbers wrong. It cannot take comfort on the brittle ground that the sums said to have not been remitted have fluctuated. It has not convincingly explained why it held on to monies belonging to the Federation Account, and why it used the monies for its own purposes without the lawful authority of appropriation by the National Assembly. Every kobo not credited to the country or not properly accounted for by an agency of the government violates the constitution and the law.

I do not believe that we have sunk so low or that our moral prisms have so contracted as to consider $10bn – nearly a third of the annual federal budget – as too puny to worry about. A kobo of public funds not properly accounted for should bother us, because a person that can steal a penny will steal billions if opportunity presents itself. We should rather aspire to live in a country whose revenues do not leak, leading us free to concentrate on value-for-money in government investments and expenses.

The Federation Account belongs to the federal, state and local governments, and the quantum of the balances it contains should concern every Nigerian. Many of the 36 states are rightly concerned that the explanations offered imply that the NNPC can practically shortchange them at will. The conduct of the NNPC thus distorts the revenue allocation formula, already weighted too much in favor of the Federal Government. It must be in the interest of the FGN and the NNPC not to allow the perception to fester that the NNPC has indeed become a state within a state, protected and reinforced in its law breaking by a corrupt and benefitting Jonathan government.

As a minimum, that would entail thorough scrutiny of the NNPC accounts which have not been audited since 2005, if only to avoid legal entanglements with state government who are at liberty to sue for the non-remitted funds. The National Assembly has to ask the tough questions regarding the legality of the strategic alliance agreements between the NNPC/NPDC and  Atlantic Energy and other fly-by-night ‘indigenous operators’ with not track record other than connections to the Villa. It is a serious matter when a CBN governor goes public with the charge that “these agreements merely serve to transfer revenue due to the Federation into private hands” – yet another clear, more serious case of theft of federation revenues by a private firm, facilitated by the NNPC.

Citizens should put pressure on all elected officials that amidst these contentions, Nigeria will emerge with a transparent, rigorous and effective oil revenue collection and remittance system. While awaiting passage of the much delayed Petroleum Industry Bill, the NNPC should in the interim be compelled to remit all funds first, and submit verifiable claims for reimbursements later, after due appropriation by the National Assembly. In the meantime, we should thank for the CBN and its  courageous governor for providing the facts and figures, and the opportunity to introduce real transparency in the very opaque oil revenue remittance regime of Nigeria. The ball is now in our court to ensure that this case of financial malfeasance is not swept under the Jonathanian table!


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  • sadiq

    Sanusi has do one the right thing.

  • Garden-City Boy

    The season has seen a rash of concert shows presented by a big phil(dis)harmonic orchestra. Though bigger than Beethoven, Handel and Bach all put together, the dissonance is characteristically bizarre. The rendition has become drab, noise pollutant of nuisance value. The lyrics are never about involvement in solutions to the “place they made ungovernable”, or about a conscientious resolve to curb salvos of inflammatory rhetoric and seditious excesses they spew. It is all for one simple reason: each performer has to act his own bit of the role in the infernal script composed and mastered by the sneaky Fani-Kayode, and engineered by the grand orchestral conductor. They are not anarchists for nothing. El-Rufai would still be pining away in self-exile but for Janathan’s benevolent presidency. He is notoriously good at shedding floods of crocodile tears. The pretentious overnight realization that ”… revenue allocation formula, (already) weighted too much in favor of the Federal Government “ is ridiculous, and portrays El-Rufai as sly and hypocritical, and smacks of moral bankruptcy of a disingenuous man. Certainly, this posturing is in serious conflict with his regret for “…the Federation Account (which) belongs to the federal, state and local governments…” ends up in ‘private pockets’.
    The man is a big-time beneficiary of that “privilege”, no thanks to his exalted membership of a Presidential Economic Team of 2003 to 2007”. There is no way in the world el-Rufai wouldn’t own one of those deep pockets he describes. He was steeped deep in what he now criticizes was a “running joke”. He relished every moment of the four-year solid spell, which, of course, predated Jonathan’s tenure. And it was very good then. Clearly, the 2003-2007 crop of modern-day Robin Hoods find the APC the point of coalescence. As the cabal falls from grace and begins to miss the unbridled milking opportunities (thanks to the administrations fiscal policies) the strategy is to hyperbolize made-up faults. Just as every spoiled yesterday’s man, the el-Rufai people take their turn to agonize in the rueful
    nostalgia of the grandstanding, the spotlight and the obsessive public attention they enjoyed. Weaning is never easy after an addiction. It must be observed that his howling is the quintessential baying-at-the-moon seen among classic YESTERDAY’S MEN, as described by Reuben Abati. It typifies congenital, runaway avarice of Northern friends and their habit of intrusive over-reach. They stick the “belongs to FEDERATION ACCOUNT” logo to resources belonging to other Nigerians with military fiats, consigning them to “FEDERAL” confiscation. The “Federal” overseer (usually the awusa head of state and his kinsmen) then decides who gets what… as their lordships please. Or “the place made ungovernable”, Boko Haram unleashed, dogs and baboons carcasses get soaked in their own blood. But all that is the easy part.
    Now, here is the hard part. Any mention of the contentious ”FEDERATION ACCOUNT” phrase shatters serenity; every Northern neck turns and all attention trained in the direction of Southern oil. It sets awusa ears wafting for the source of those sound-waves, just as those of wild dogs tracking prey in the Serengeti. El-Rufai and Lamido Sanusi represent self-styled, wide-eyed Northern conquistadors who owe patriotism only to oil revenue and oil blocs in the South, never to a national cause. To them, Nigeria is one unending buffet, a big pot of addictive honey and a hapless milking cow.
    Strangely, this clan rarely feels embarrassment for ZERO contribution to this “FEDERATION ACCOUNT” they hold so sacred. Neither do they feel any shame for barbarism –the only commodity they contribution to society. Yet, el-Rufai has the temerity to preach the doctrine of Southern Oil = OUR “NATION’S OIL RESOURCES”; revenue from the North (cattle business, groundnuts, kwuli-kwuli , alewa, fura da nono, dankeli, kaza, kwazo, rago, dawa, joro and akwuya) = awusa private pockets .
    Now, how does a clan find contentment with a century-old designation as ravenous parasites and hangers-on? Meanwhile, Southerners bear the brunt of environmental devastation resulting from oil exploitation that enriches awusas, as well as the criminality of barbaric, AK-47 wielding militia dubbed fulani herdsmen. Speculations that these cattle herds are indeed owned by the Northern elite, who enlist the services of these fulani gangs, are gaining fast traction. These cattle owners provide fulani bandits with the illegal murder weapons they carry around with impunity and terrorize innocent Southerners.
    We are yet to record income into the “FEDERATION ACCOUNT” from monumental investments on over 17 gargantuan River Dam Projects all in the North, let alone from the massive Lake Chad Basin Project. Paradoxically, the chief executives of those projects -all awusa people- have their salaries sourced from the “FEDERATION ACCOUNT”.
    The infantile tantrums of El-Rufai, his Sanusi and awusa brothers have become too boring, and so should Lord Lugard’s 100-year free lunch which should have long been over. Moreover, it is more dignifying for El-Rufai and his people to quit salivating over Southern oil, oil revenue and oil blocs. It ia about time they seriously considered creative ways of self-sustenance. The North must stop acting like they need government to award contracts to, may be, Chinese surgeons for mass G-tube installation program to feed crude oil into their people. We hope it doesn’t come to that.

  • Charlie

    El-Rufai knew NNPC was corrupt and left office without doing anything about it. Jonathan advocated for the removal of oil subsidies to reduce this fraud and Nigerians rejected this move but he was able to secure a partial de-regulation. IF this kind of monumental fraud is taking place under partial de-regulation, imagine what must have been going on during the subsidy regime. It is under GEJs administration that these issues concerning NNPC is being tackled – after El-Rufai:s exit from government. Nigerians should not be too hasty in judging GEJ until the issue is concluded and closed. The CBN has woken up to its responsibilities after a long slumber. These are all good things happening under GEJs administration. The best is yet to come.