By Emmanuel Aziken, Ayodele Adegbuyi & Emma Ujah
Posted to the Web: Wednesday, August 23, 2006

The requests which came in three different letters to the President of the Senate include a supplementary appropriation bill of $1.063 (N135 billion) for Government and a request to withdraw N600 billion from the excess crude account to cover shortfalls in the federation account.

Meanwhile, the Federal Ministry of Finance has suspended deductions from state governments’ monthly allocations in respect of the Paris Club debt deal. Also, the Federal, state and local governments are to share N245 billion for the month of July.
Besides the supplementary appropriation and approval to withdraw from the excess crude account, President Obasanjo is also seeking Senate’s approval for a $2.5 billion (N320 billion) loan from China for the purpose of constructing a power plant on the Mambila Plateau, the modernisation of the railways and the rural telephony projects.

In his letter seeking Senate’s permission to withdraw N600 billion from the federation account to cover budgetary constraints arising from the crisis in the Niger Delta, the President said: “Immediately the budget was passed, the problem in Niger Delta assumed a different dimension resulting in oil production shortfall of about 600,000 barrels per day.
“Currently, we are producing about 2.5mbd which has significant negative variance on oil revenue. This is, therefore, affecting the full implementation of the federal budget and the states and local government budgets as well.

“I, therefore, wish to seek the understanding of the Senate to make up for the shortfall estimated at N600 billion for the federal budget from the excess crude proceeds. Each tier of government will get its proportionate share. This is borne out of my concern to ensure that Budget 2006 is fully implemented at all levels of government.”

In the letter dated August 16, 2006 on the proposed loan from China, the President said $1 billion of the $2.5 billion loan would be used for the construction of the N2600MW hydroelectric power plant, $1 billion for the first phase of the modernisation of the railways which would run from Apapa to Ibadan and another $500 million for the rural telephony project.

Justifying the loan request in the face of the country’s record external reserves, he said: “Much of the infrastructural projects to be financed have high import content and their funding with such a cheap facility would obviate the need to draw down on our external reserve, thereby enhancing the stability of the exchange rate of the Naira, among other benefits.

“The use of the Chinese facility will also assist us in keeping within the framework of our Policy Support Instrument (PSI) with the Bretton Woods Institutions as it would relieve part of the burden which the implementation of the projects would have exerted on the budget.”
In yet another letter dated August 16, 2006, the President is asking for $1.063 billion to fund the power sector projects in the Niger Delta. The President had last year informed the Senate of his intention to draw from the excess crude account to enable him fund those projects but drawing a strong objection from the Senate on the issue.

The President of the Senate had advised President Obasanjo to seek a supplementary budget to cover the projects. In a letter with reference number NASS/S/1017/X/150 dated October 20, 2005, the President of the Senate had amongst others demanded “that the Federal Government share of the project should be determined and funds required for the implementation be identified and appropriated in line with Section 81 of the Constitution. That the President should consider sending a Supplementary Appropriation Bill to cover the Federal Government contribution to the project.”

FG suspends monthly deductions

The Minister of Finance, Mrs. Nenadi Usman, has suspended deductions from state governments’ monthly Federation Accounts allocation in respect of the Paris Club debt deal, directing that further deductions could only be effected after the on-going reconciliation on states’ indebtedness has been completed.

The decision was contained in an address delivered on her behalf by the Minister of State for Finance, Engr. Elias Mbam, at the monthly Federation Accounts Allocation Committee (FAAC) meeting in Abuja, yesterday.

Mrs. Nenadi also gave the reconciliation committee an October deadline to submit its report which would provide her ministry accurate debt portfolio of each of the states and enable the ministry make deductions proportional to each state’s indebtedness.

She asked all parties to the debt reconciliation exercise, particularly representatives of state governments, to co-operate with officials of the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) as well as the Debt Management Office (DMO) with a view to concluding the exercise within the next two months.

The minister said the deductions would resume in January 2007 after reconciliation had been concluded and appropriate debt portfolio charged to the accounts of individual state governments.
The sum of N254. 485 billion was shared among the three tiers of government from revenue that accrue to the Federation Account and proceeds of the Value Added Tax (VAT) in the month of July.

A total of N422. 753 billion was earned in the month of July from oil, taxes and customs duties but almost 80 per cent of the amount had gone mainly into excess crude oil account and payment of seven per cent and four per cent collection costs to the Nigeria Customs Service and Federal Inland Revenue Service (FIRS), respectively.

The Federal Government took N110.931 billion of the N236.757 billion distributed from the Federation Account, indicating a N6.816 billion decrease when compared with the amount it got last month. States and local governments were allocated N56.266 billion and N43.378 billion, respectively.