'Excess Crude Proceeds Not Spent'
House to investigate alleged expenditure
From Chuks Okocha, Ahamefula Ogbu and Kunle Aderinokun in Abuja
The Federal Government yesterday said it has not spent any part of the proceeds of the excess crude and that the money kept in an account being operated by the Central Bank of Nigeria (CBN) stands at about N386 billion at the end of August.
The clarification by the government was a response to the interpretation given to a CBN quarterly report to the effect that the Federal Government may have used N101.3 billion from the excess crude proceeds to finance deficit recorded in the budget uptil August. The CBN has also denied the report.
Minister of Finance, Dr. (Mrs) Ngozi Okonjo-Iweala, made the clarifications on the state of the excess crude account at two different occasions in Abuja. She did first at a meeting with a delegation of the International Monetary Fund (IMF) and at another meeting with the National Working Committee (NWC) of the Peoples Democratic Party (PDP).
The House of Representatives has, however, directed its Committees on Finance and Appropriations to investigate the alleged expenditures from the excess crude account.
The CBN had in its Monthly Economic Developments for August stated that "during the first seven months of 2004, the fiscal operation of the Federal Government was estimated to have resulted in a deficit of N101.3 billion, as against N110 billion in the corresponding period of 2003," and the "the deficit was financed from ways and means advances from the CBN, excess crude proceeds and other funds."
Speaking yesterday in Abuja after a meeting with Article IV Consultative Mission of the IMF, Okonjo-Iweala said that the excess crude account has not been touched. She also ruled out the possibility of spending from the account until decisions have been reached by all stakeholders on how it would be spent.
According to her, "as at now the excess crude account has N386 billion and it has not been touched, not a single kobo. And there is no intention of doing that until all authorities that this money belongs to come together to agree on how this should be spent."
She stated that the deficit will be financed using recovered monies from the money looted from the nation's purse. She pointed out that the level of deficit was "totally in order" at this period of the year as the government had provided for N181 billion deficit in the budget.
"Remember that when we made the budget, we had projected a deficit of N181 billion, so the fact that we have deficit of N100 billion is totally in order.
In fact we are performing quite well and how is that deficit to be financed? We have the looted funds that are coming. You heard the news from the Swiss government, we are not at the point where we are desperate and say how do we finance , how do we finance?.
"That money will come in and that will help us finance it. All these are the spending that we have done on education, on health, on infrastructure and are in anticipation of that money coming. This money will now come to block that gap. Again, its not that we are going to take the looted funds and just throw it away.
"But we have already, in anticipation of getting it , spending on infrastructure, education, on health that we agreed that and discussed with... authorities. So when the money comes, it will help to finance that, so there will be no question of access to excess crude," she explained.
Corroborating the finance minister, Director, Research, CBN, Dr. Joseph Nnanna said the apex bank in the report did not say the Federal Government had spent part of the excess crude proceeds.
"We only reported that the government's budgetary operation resulted to deficit of a N100 billion or so vis-a-vis, Federal Government's retained revenue and we only said that the only way this could be financed are from several sources including excess crude reserves," he said.
He added that "we never said that the Federal Government has spent it, if it has spent it, then it won't be in deficit. If the Federal Government has accessed that , then the deficit we reported will not be this. We are only saying that government's operation, if you look at government's retained revenue for the period and government's expenditure on cash basis, about N100 billion will be deficit and then we asked a question as researchers, how would this be financed and then we said amongst other sources, FG can use the excess crude oil proceeds, if and when it is shared.
"We did not say Federal Government has touched a kobo from the excess crude oil proceeds. I repeat, the Federal Government didn't touch a kobo. I'm happy this report came out it did when the IMF whom you know is very objective to be here to say whether or not from their review of the account, a penny or a kobo from the excess crude proceeds has been touched," he said.
The CBN later reaffirmed this position in a statement signed by Nnanna.
"The draft document of the CBN monetary policy committee which was obtained unofficially by the press was distorted by newspapers to achieve their ulterior motives.
"The accurate fact as stated in the monetary policy committee's final report under reference was "during the first seven months of 2004, the fiscal operation of the Federal Government was estimated to have resulted in a deficit of N100.3billion, as against the budget deficit of N105.7 billion in the corresponding period of 2003. The deficit was financed from ways and means advances from the CBN, excess crude proceeds from 2003 and other funds," the CBN clarified in the statement.
The meeting with the IMF was attended by other key officials of the government ministries and parastatals including a director in the National Planning Commission (NPC), Dr. Omotosho; Chief Financial Officer, Nigeria National Petroleum Corporation (NNPC), Chief Harry; Special Assistant to the Finance Minister, Dr. Bright Okogu.
The IMF's Article IV Mission Team Leader, Mr. Menahem Katz rated high, the performance of the nation's economy in the last sixth month-ending June 2004.
He said "globally, performance was very, very good, fiscal policy performed better than programmed, monetary policy was on target and the results are inflation has come down sharply. According to him, "inflation rate as at the end of June. It came down to 14.1 percent from 23.8 percent in Dec 2003 and to 10.7 percent in July. Gross international reserves have increased substantially from $7.5 billion at end 2003 to $11.4 billion as at end-June 2004."
He pointed out that the implementation of a prudent budget by the economic management team including the adherence to oil-based fiscal rule worked out very well with the economy as it "has resulted to sharp reduction in inflation and the massive accumulation of reserves."
This development, according to him, is" a good example to contrast with the past performance of the Nigerian economy where you have the boom-bust cycle. When oil prices went up, expenditure went up with it."
Also, Katz said the IMF supports strongly, the three-year budget framework recently introduced by the Federal Government.
"It is a very positive development. It gives the budget the sense of continuity. You can have a vision and implement it rather than having one budget in isolation because you have projects that take a few years to implement. This way you have a better sense of the framework. It something that we strongly support and the World Bank had its practice that is being used all over the world ," he said.
Addressing newsmen after meeting with the PDP officials, the Finance Minister said: "The execess crude is being saved and not one single penny of it is being touched. We have saved N386 billion or $2.9 billion at the moment and it has enhanced the foreign reserve to about $12.45 billion and all that is being saved for the Nigerian people," she said.
On the level of inflation in the country, the minister said "from June to June, the inflation rate is 14.1 percent, which is lower than it has been in the recent past. July to July is 10.9 percent."
According to Okonjo Iweala, "the trend is in the right direction."
Answering a question on the outcome of the meeting, she said the meeting dwelled on "the state of the econmy, in terms of implemetation of the budget."
The minister also stated that the discussion was a friendly chat, and that it bothered on how to move the country forward.
Also in a statement , the National Publicty Secretary of PDP, Venatius Ikem, said "the NWC wishes to state in unequivocal terms that the money from the said excess crude oil which totals N386 billion as at August 30, 2004 is intact. It further advised that there should be no pressure from any quarter for the expenditure of this money merely to satisfy unplanned contingencies."
On education, the PDP said the meeting examined the poor state of facilities in our tertiary institutions and agreed to work closely with the ministry on policies aimed at improving the curriculum, teaching and research as well as a deliberate plan for infrastructural development to accommodate the large turn outs from the improved enrolment arising from the UBE scheme.
On the National Poverty Alleviation Programme (NAPEP), the statement said the party held satisfactory meeting with the National Co-ordinator, Dr. Magnus Kpakol, who gave a commendable pathway towards a workable framework for the reduction of poverty in collaboration with the private sector.
Yesterday, at the House of Representatives, Deputy Speaker, Hon Austin Opara, who presided issued a directive based on reports that the excess crude fund is already being spent. A member, Hon Idris Nadabo had called the attention of the House to a newspaper report on the issue.
"I want to bring an important information to the House. I heard from the BBC this morning that the Federal Government has spent over N100 billion of the crude oil revenue. We should mandate the Appropriations Committee to investigate the issue", Nadabo told the House.
Opara thereafter directed the Committees to investigate as well as get more information on the issue so as to get the House better informed.
Thereafter, the House passed a motion directing the Department of Petroleum Resources (DPR) to set machinery in motion to ensure strict compliance with display of prices of petroleum products in filling stations as well as ensure that the prices displayed were the ones offered to the public.
The House also directed that all the billboards that announce prices should be uniform in all filling stations across the country and that they should contain numbers of the DPR to enable those who feel cheated to call immediately and lay their complaints for investigations.
Also, the House pressed for sanctions on any filling station, which fails to comply with the directive especially. They want any station, or retail outlet, which fails to display the prices to be sealed.
The House also urged the DPR to ensure that prices displayed on such boards reflect the quantity of products given to Nigerians at retail outlets while they urged the house Committee on Petroleum Refineries to intensify its oversight functions in the area of petroleum products distribution and sales, in view of its importance to the economy.
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