Nigeria settles for sharing of oil windfall

Sep 28, 2001 02:00 AM

The disagreement between the Nigerian federal and state governments over the sharing of the $ 1.2 bn crude oil windfall was resolved as both parties agreed on a staggered disbursement of the fund by the Federal Government to the states.
At the Presidential Villa, location of the last meeting of the National Council of State, it was revealed that President Olusegun Obasanjo is settling for the sharing of the oil windfall, guided by compelling demands of state governors for fund to execute projects. Consequently, the Federal Government, according to the source, has agreed to complete the staggered disbursement by December this year.
The source also said that the council took note of the prevailing slump in global crude oil market following the September 11 attack on the World Trade Centre, New York and Pentagon in Washington DC and noted that there might not be any of such windfall to share again next year. The accumulated fund arose from a steady rise of crude oil price at the spot market above the $ 20 per barrel projected by the Federal Government in this year's budget.

Aware of the fund, the state governors teamed up to raise agitation on the need for the money to be shared and towards this end, employed pressure and sustained media campaign to achieve their aim. This culminated in the meeting of the National Economic Council (NEC) comprising of the 36 state governors and Vice President Atiku Abubakar on August 22.
The council at the end of the meeting that the money should be shared equally amongst the three tiers of government instead of the Federal Government plan that it be kept in the stabilisation account. But President Obasanjo had, a day before the NEC meeting, insisted that the excess crude oil money would not be shared as it had not been appropriated.
He said he was unperturbed by the threat of the state governors to take legal action against his government if it refused to have the money shared. But the governors at the NEC meeting, also endorsed another meeting of theFederation Accounts Allocation Committee, as a follow-up to the stalemated one and to be attended by state Finance Commissioners, the Accountant General of the Federation and Finance Minister "to work out an acceptable formula on how the money will be shared."

Governor Adamu Aliero of Kebbi State told State House correspondents after the NEC meeting that "the stalemate of the meeting of the Federation Accounts Allocation Committee was as a result of serious disagreement, the meeting ended without any conclusion." "The fact of the matter is that states insisted on sharing the excess crude oil money and the federal authorities insisted on maintaining the amount in a stabilisation account. During our meeting, this issue was exhaustively discussed and resolved and we agreed that the commissioners of finance will meet together with the Accountant General of the Federation and the Finance Minister to work out an acceptable formula on how the money will be shared."
On what informed the governors' insistence that the money be shared, contrary to Federal Government position, Governor Lam Adesina of Oyo State said "all states need money, even if we want to save at all, we cannot save at the expense of the people we are presiding over."
He added that, "most of the states in Nigeria cannot even from their monthly revenue allocation afford to pay workers their due salaries and allowances. Therefore, whatever excess we have, we cannot say because we want to make savings, shirk our responsibilities and obligations to the electorate. Otherwise, our performance will be nil or we shall pose a threat to democracy if we don't perform and people want to know the dividends of democracy."

The president said before the NEC meeting: "We shall meet in court," in apparent reaction to the threat of the states to drag his administration to the Supreme Court over its refusal to share the oil windfall. "We shall maintain fiscal responsibility at the federal level," he stressed, assuring that the excess crude fund in question wasintact.
"It is their money and it is also our money, but it has not yet been budgeted," the president stressed. He maintained that all funds accruing to the Federal Government would be spent prudently, noting that prudence must also be observed at the states and local government levels. The suit, according to sources, was to ensure a transparent process for an equitable distribution of revenue in line with the stipulation of Section 162 of the 1999 Constitution and the dictates of fiscal federalism.
Edo State Commissioner of Finance, Mr. Bright Omokhodion, who dropped the hint of the court case said that the decision to seek redress in court was not confrontational but was by the commissioners' resolve to forge a truly equitable and transparent financial and accounting system for the country in the spirit of democracy and in line with the provisions of Section 162 of the constitution.

Omokhodion said the states would be praying the court to stop the Federal Government from either withdrawing from the excess crude oil sales account or adopting any other sharing formula than that supported by constitutional provisions. The House of Representatives asked the presidency not to share the $ 1.2 bn but instead open a special account for the money.
The message was handed down by the chairman of the House Committee on Banking and Finance, Honourable Dauda Bundot, even as the House queried the Central Bank of Nigeria (CBN) over the Commission on Transaction (COT) charges by commercial banks.
The House's position tallied slightly with that of the chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Eng. Hamman Tukur, who expressed misgiving at what he described as the "militancy" of some state governors over the issue, insisting that the excess money from crude oil sales belongs not only to state government, but all beneficiaries of the Federation Account.
Explaining the House's resolution on the issue, Hon. Bundot said that the House was of the view that sharing the money may cause excess liquidity thereby resulting in inflation. His words: "During our meeting with the CNB officials, we were made to understand that there is excess liquidity in the system with a very low productivity ratio. This, they said does not augur well for the development of the economy that is based on a single product."

He said that the House's advice to the presidency is that a special account be opened for the $ 1.2 bn excess crude pending when there would be an improvement in the economy. Hon. Bundot stated that since the Central Bank is not only bankers to the Federal Government alone," the only acceptable option was for the money to be put into a special account with the consent of all tiers of government."
He explained that "though section 160 of the 1999 constitution stated that all the revenue from oil be shared among Federal, states and the local government, in this case there must be some exception, at least for the general interest of the economy, because, if the $ 1.2 bn is released,then the Naira will further depreciate and the economy will be worse off".
However, representatives of the Southern States of Nigeria had earlier in Abuja, boycotted the Federation Account Allocation Committee meeting for the month of September to protest the decision by the Federation Government not to disburse the $ 1.2 bn proceeds from sale of crude oil, just as state commissioners in attendance recommended that 50 % of the outstanding volume be applied to the supplementary budget.
Only about 15 commissioners were present at the meeting, all of whom were of Northern states, prompting Senator Jubril Martins Kuye, Finance Minister of State, who presided over the meeting, to declare that all decisions taken would be conveyed to the states not in attendance, for their information and contributions.

Source: This Day/All Africa Global Media
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