Forex Deals: FG Wants Finance Commissioners Jailed
Says N271bn in excess crude account
By Mike Oduniyi
The Federal Government is currently working on a draft bill that, if passed by the National Assembly, prescribes a jail term for the finance commissioner of a state found to have misused its share of revenue allocation from the Federation Account.
The Minister of Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala, who disclosed this yesterday in Lagos, said excess crude earnings stood at N271 billion (approximately $2 billion) as at the first half of this year.
The money, she said, has been saved "in our excess crude account belonging to all tiers of government."
Okonjo-Iweala, who spoke on how the Federal Govern-ment intends to manage the windfall from petroleum earnings at an Oil and Gas Seminar organised by the Institute of Directors (IoD), said the proposed bill tagged "Fiscal Responsibility Bill", represents a major platform for the effective implementation of the government's economic reform plans.
The bill, which is already at an advanced stage of preparation, she said, will also help the Federal Government to better manage any windfall in revenue from oil exports.
According to her, the proposed bill will give legal backing to a government policy that seeks to ensure that oil earnings above a budget price, is automatically saved.
"This practice is being codified in the form of an oil price based fiscal rule that is a centerpiece of the fiscal responsibility bill. The idea is each year, various arms and tiers of govermnent will decide on a sensible oil price at which to budget," said the minister.
"Any earnings above that price will accrue as savings. If oil price falls below the benchmark, price for a sustained number of weeks or months (to be agreed), all tiers of government would have recourse to savings from the excess crude accounts which they can use to cushion the drop in earnings and avoid a sharp dip in expenditures," she added.
The bill, she said, "will help us to better manage the volatility of revenue and expenditure. It will enshrine an oil price based fiscal rule, windfall oil savings in government accounts, along with triggers for accessing such savings.
"It will enshrine codes and patterns of expenditure for both capital and recurrent budgets. It will enshrine accountability for managing public resources and implement punitive measures for contravening codes of good fiscal governance."
The Federal Government had recently alleged that governors usually divert monthly allocations they get from the Federation Account Allocation Committee (FAAC) to "buy up foreign exchange".
While some governors have challenged the Federal Government to name the erring states, they have also been agitating that the government at the centre share out excess oil revenue.
According to the Finance Minister, while the Federal Government duely recognises the fact that any excess crude oil revenues belong to all the three-tiers of government, the parties, however, still needed to come to an agreement on the proportion of the excess revenue to be saved and criteria for accessing the surpluses that will be put away.
"We have assured our counterparts at the sub-national levels that should they so wish, their shares will be kept solely in their name."
The Federal Government's reveneue projection for 2004 fiscal year, was bsed on an oil price of $25 per barrel. Oil prices have however, been well above $30 per barrel since the year began.
Okonjo-Iweala said the Federal Government on the other hand, was keen at using the excess oil income to build "earmarked reserves" that will go towards cushioning the effects of volatility.
The increase in oil revenue, she said, bolstered Nigeria's foreign reserves to the current levels of $11.93 billion.
Also speaking at the event, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engineer Funso Kupolokun, said the Federal Government needed to make available $3.7 billion as cash call every year in order to meet its target of raising production to 4.0 million barrels per day (bpd) by 2007.
The Federal Government's approved a cash call of $3.2 billion for oil operations in 2004.
According to Kupolokun, over $5 billion would be needed annually to fund joint venture operations of which the NNPC is expected to contribute about $3.0 billion as cash calls, plus about $0.7 billion for gas development.
"In the face of competing needs for government funds, there may be a funding gap, which may have to be provided by the Joint Ventures under agreed funding schemes if the national aspirations are to be met," he said.
The NNPC chief executive said that the corporation and its joint venture partners were working on alternative funding schemes that will ensure a good level of sustainable development and growth for the industry.
The parties he said, was currently carrying out a re-appraisal of these funding modalities in order to ensure funding stability.
The parties, hoped developed these through
Development of competency for project ranking and allocation of resource needs
Identification of funding options that are not burdensome to the government
Encouragement of banks and institutions to establish joint revolving credit schernes for funding indigenous programme.
|
