Nasiru Garba Dantiye, a member of the House of Representatives (ANPP, Jigawa, 2003-2007), had lofty ambitions for his constituency. When he received the mandate of the people of Garki/Babura Federal Constituency to represent them at the lower chamber of the National Assembly, he had hoped he could better their lot through sponsorship of people-oriented legislation as well as identification and attraction of developmental projects from the federal government to the area. To this end, when it was time to prepare the 2004 Appropriation Act, the first after he was elected, he selected water supply as his constituency project.
The project secured a place in the 2004 Budget and adequate fund was allocated for its execution. Consequently, contracts for the provision of nine boreholes were awarded by the supervising Ministry of Water Resources. With this done, an elated Dantiye went back to his people in Jigawa State to celebrate. To him, he had effectively overcome, for his people, the problem of lack of potable water. But for Dantiye and his people the joy was not to last long. As contained in a protest letter dated 4 May 2006 and forwarded to the Minister of Water Resources by Dantiye, only one of the nine boreholes was completed. Others were abandoned half way. Even the one that was completed worked for only seven days. More curious to Dantiye was the fact that the contractor engaged by the Ministry was fully mobilised. Today, Dantiye believes that the Ministry colluded with the contractor to defraud the people and deny them the projects which were duly budgeted for.
Yet, the case of Dantiye is only one of numerous cases of abandoned and non-implemented projects, despite being duly budgeted for and money released for their execution. According to documents released by the Office of the Accountant-General of the Federation and the Ministry of Finance, the Obasanjo administration received as its share from the Federation Account, a total of N7.43 trillion between June 1999 when it assumed power and March 2007. The allocation is believed to be the highest received by any administration in the country’s history. This was made possible by a disproportionate revenue allocation formula, which the Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, has repeatedly said unduly gives the Federal Government a lion’s share of the Federal Allocation. In the operating revenue formula, the FG is entitled to 56 per cent allocation, as against 44 per cent for the entire 36 states and 774 local governments. Throughout the period, all attempts made by the Hamman Tukur-led RMAFC to review the formula after an intensive research that lasted over 12 months were vehemently resisted by the President who could not tolerate a reduction of his slice of the national cake from 56 per cent to 46.63 per cent, as proposed by the ‘rebellious’ commission.
During the eight-year reign of President Olusegun Obasanjo, there were substantial, and progressive, increases in the yearly national budgets. But, according to critics, most of the projects that were meant to be carried out with allocations in the budget were shoddily implemented. In many cases, the implementation level (of the budgets) was less than 50 per cent, even though the government had more than enough revenue to fund the projects budgeted for. Also, in the last eight years, the Federal Government has harvested huge amounts of money as extra-budgetary revenue from the continuous rise in the price of oil in the global market.
Between 2001 and 2007, the total amount accruing to the Federation Account was put at N10,235,282,759,213. Of this, N7,426,884,720,086 was allocated to the federal government as its share by RMAFC. But analysts are emphatic that the rate of development does not reflect the monies netted in. They are quick to cite key sectors like roads, energy, water resources, education and health, into which the bulk of the federal allocations were sunk, but with nothing to show for it.
For example, between 2001 and 2007, a total of N673 billion was budgeted for roads maintenance across the country. But Nigerians believe that the work on ground does not reflect the whopping sum appropriated and released for their rehabilitation. Indeed, federal roads are now worse, with many portions being death traps.
President Olusegun Obasanjo personally admitted the failure of his administration in this area. During his re-election campaign in 2003, Obasanjo, speaking at a function in Ogun State, decried the state of Nigerian roads, on which he lamented, the federal government had expended about N300 billion as at then. The sorry state of the roads had left many asking: where did all the money go?
Investigations by this magazine revealed that while huge sums of money were budgeted for roads and other projects, but the jobs were executed shoddily with the officials, in most cases, colluding with the contractors to defraud the government. Most of the roads degenerated into a deplorable state as fast as they were constructed or rehabilitated, as the case may be.
Like the roads, the power sector is another area into which the government of Obasanjo sunk large chunks of the annual budgets. About N574 billion was pumped into the sector during Obasanjo’s tenure, with nothing to show for it. At the moment, the country generates less than 3,000 megawatts as against the national consumption requirement of about 12,000 megawatts. This has left Nigerians with epileptic power supply and outright power outage for most of the time. Yet, when Obasanjo took over the reins of power in 1999, he had promised to jack up the power output from about 2,000 megawatts being generated then to 10,000 megawatts by December 2007.
The dismal scenario is replicated in the Education and Health sectors. In particular, the Academic Staff Union of Universities often went on strike over poor remuneration. Their grouse has mainly been that public institutions are starved of funds, with their allocations in the budget not released on time or at all, while the President had little or no problem spending billions of Naira on jamborees. Prominent among the examples they cite are the N30 billion sunk into the 2003 8th All African Games and the over N10 billion spent on hosting the Commonwealth Heads of Government Meeting, CHOGM. President Obasanjo was also accused of forcing the country to cough out a whopping N10 billion to increase the number of jets in the Presidential fleet, while another N73 billion was expended on the construction of the National Stadium in Abuja.
Apparently frustrated, the Obasanjo government is seeking a face-saving way out of the quagmire it has found itself in the execution of the National Integrated Power Project Scheme. Under this scheme, the government planned to establish a power plant in each of the eight states in the Niger Delta region. The proposed power plants include Gbaraian, in Bayelsa State(225 mw); Ihovbor, Edo State(451mw); Omoku, Rivers State(230mw); Sapele, Delta State(451mw); Egbema, Imo State(338mw); Calabar, Cross River State (561mw), and Ibom, Akwa Ibom(188mw). These, according to Dr. Edmund Daukoru, Energy Minister, would add 2,444mw to the national grid.
Government’s effort is being complemented by the introduction of Independent Power Projects, IPPs. The projects include the Omoku and Trans-Amadi gas turbines in Rivers State; the Akwa Ibom IPP; the Agip Okpai power station in Delta State, and the Obajana power station in Kogi State. Others are in Geregu, Kogi State (414mw); Omotosho, Ondo State (335mw); Papalanto, Ogun State (335mw), and Alaoji, Abia State (346mw).
As desirable as the scheme might appear, the process of funding has, however, generated several questions. The projects are projected to cost $3.4 billon. But, already, about N400 billion is said to have been illegally withdrawn from the Federation Account by President Obasanjo without appropriation by the legislature. The unauthorised withdrawals made for the funding of the IPP has indeed questioned the integrity of President Obasanjo who prides himself as a champion of due process. As revealed by Senator Farouk Bello Bunza, the illegal withdrawal of $3.4 billon from the Federation Account is a violation of the provisions of Section 162 of the 1999 Constitution.
Bunza recalled that President Obasanjo had in a letter dated 9 September, 2005 and addressed to the Senate President requested the Upper Chamber to endorse the withdrawal of $2.475 billion from the Federation Account for the Power Sector Development Scheme. But the Senate, vide a resolution, advised the President to forward his request by way of an appropriation bill for the contribution of the Federal Government to the project; and for the states and local governments’ contribution to be appropriated by the relevant authorities as required by law. At the end of the day, however, the President, without recourse to the Senate, authorised the withdrawals from the Federation Account. Though the initial request was $2.475 billion, by September last year, the withdrawals from the account for the purpose of funding the NIPP had ballooned to $3.4 billion.
The Senator’s position was corroborated by the RMAFC which, on Monday, 21 May, dragged the Federal Government to court over what it claimed was continuous illegal withdrawals from the Federation Account. In the originating summons, the commission sought interpretation and determination on whether, by virtue of relevant sections of the 1999 Constitution, the Attorney-General and the Ministry of Finance are entitled to deduct monies directly from the Federation Account.
The RMAFC argued that the FG has withdrawn monies from the Federation Account for the National Integrated Power Plants ($3.4 billion); Nigerian Railways Corporation ($250 million); Paris and London Clubs debt percentage commission (N13.7 billion); monthly direct deduction under the ALGON-Assisted health scheme; 7 per cent monthly deduction as cost of collection of revenue in favour of the Nigeria Customs Service, and a similar collection of 4 per cent in favour of the Federal Inland Revenue Service.
The commission asked the court to determine whether the cost of collection of revenue ought to be charged on the Consolidated Revenue Fund or other funds such as the VAT Pool Account rather than the Federation Account. The commission therefore, sought “a declaration that it amounts to double charging for the Federal Inland Revenue Service to draw cost of collection both from the VAT Pool Account to which the federal government is entitled to 15 per cent, and then directly from the Federation Account.”
In the affidavit, the Commission claimed that from January 2005 to April 2006, the FG had deducted the sum of N18,873,836,463.20 in favour of the Customs Service and N18.7billion in favour of the Federal Inland Revenue Service. It also claimed that apart from the above, the FIRS, for the same period, was the beneficiary of the sum of N17,568,245,638.62 from VAT, making a total of N26,355,758,443.92 received by the service within the said period.
The suit instituted by the RMAFC is only one of numerous ways the commission has expressed its dissatisfaction with the manner the finances of the country were handled by the Obasanjo administration. In a letter dated 10 September, 2002 and addressed to the Group Managing Director, Nigerian National Petroleum Corporation, Hamman Tukur had reportedly alleged that the country had lost N302 billion through inappropriate accounting system and sharp practices by the corporation. Claiming that all was not well with the handling of the Federation Account, he argued that the NNPC account with the Central Bank of Nigeria, CBN, was an illegality designed to circumvent the Supreme Court judgment that nullified the practice of paying joint venture partners their cost of production as first line charge on the Federation Account in the celebrated resource control suit between the Federal Government and the oil producing or littoral states.
“There were noticeable discrepancies in the receipts of revenue in the oil sector,” he claimed, adding that this may have accounted for a progressive decline in the revenue accruable to the Federation Account. Particularly, Tukur was disturbed because revenue from the oil sector formed the bulk of the financial strength of the country from which the tiers of government were funded.
Among the posers raised by RMAFC is the legal authority behind the NNPC decision to fix the price of crude oil for domestic use at $18 per barrel throughout 2002; and the legal basis of the daily allocation of 445,000 barrels of crude oil to NNPC when the refineries could hardly refine half of that quantity even at the best of times. The commission questioned the legality of opening and maintaining a cost account with the CBN and why the NNPC should export part of the crude oil meant exclusively for domestic use. It also sought to know NNPC’s justification for not remitting into the Federation Account, proceeds of the sale of exported crude meant for the home refineries; why the exchange rate at all times was fixed at N110 to a dollar, and the legal basis for using exchange rates other than those determined by IFEM at the time of sale. It questioned the basis of NNPC’s usual decision on what should be paid into the Federation Account from oil revenues. But the Presidency vehemently defended the NNPC over the allegations raised by Tukur, insisting that NNPC was in order.
Aside concerns raised by Bunza and the RMAFC, many Nigerians have also been raising eyebrows over the handling of the petroleum sector by the Obasanjo government. Chairman, House of Representatives Committee on Foreign Affairs and governorship candidate of Action Congress in Katsina State, Usman Bugaje, wondered why the affairs of the NNPC and other oil-related agencies are shrouded in secrecy. He also questioned the rationale behind the President’s refusal to appoint a substantive Petroleum Resources Minister in eight years.
The need to sanitise things in the sector may have prompted the former Senior Special Assistant to the President on Budget Monitoring and Price Intelligence Unit, BMPIU, Oby Ezekwesili, to employ the services of a United Kingdom-based audit firm, the Hart Group, to beam its searchlight on the nation’s oil industry when she assumed office as the Minister of Solid Minerals. The investigation was the first independent Nigerian Extractive Industry Transparency Initiative audit and was commissioned under the National Stakeholders’ Working Group (NSWG). The audit period covered 1999-2004. The auditor was mandated to report production and sales figures for the period, as against the actual crude oil lifted and amount payable.
Indeed, the revelations of the audit were stunning. Among other embarrassing facts, the consultant discovered that between 1999 when Obasanjo took over reins of power and 2004, the NNPC could not account for about 65 million barrels of crude oil. The cost of the crude quantity was put at about US$2.6 billion. The Hart Audit report said: “There were differences between the amounts reported within NNPC for the volume of crude sent for refining with the discrepancies between what the oil terminals recorded as sent to the refineries and what the refineries recorded as received from the terminals.”
A breakdown revealed that in 1999, the Crude Oil Marketing Department (COMD) of the NNPC sent about 66 million barrels of crude oil to the refineries. However, records presented to the audit firm revealed that the nation’s refineries received 99 million barrels within the year. This showed a difference of 33 million barrels was unaccounted for. Similarly, in 2000, 36 million barrels of crude oil was sent to the refineries as revealed by the records tendered by the COMD but within the same year, the Pipelines and Products Marketing Company (PPMC), also a subsidiary of the NNPC, reported that it received about 46 million barrels, a difference of 10 million barrels. The report averred that the discrepancies showed a shortfall of 22 million barrels of crude oil – 3 million, 2 million, 6 million and 11 million for the years 2001, 2002, 2003 and 2004 respectively – maintaining that NNPC still has not accounted for the 22 million barrels stolen at a time when oil money hovered between $25 and $40.
The Hart report which covered Physical Audit, Financial Audit and Process Audit also said the NNPC could not explain convincingly how the refineries received more crude oil in 1999 and 2002 than what was sent from the oil terminals, just as it could not account for the 22 million barrels sent to it which didn’t get to the refineries during the years 2001, 2002, 2003 and 2004.
Equally scandalous were the revelation of cases of underpayment and overpayment of invoices. The auditors observed that January 2001 fund swept by CBN was stated as N873, 857,000 instead of N8,738,857,000, an indication that the country might have been fleeced of N7,865,000,000. Similarly, the sum of N734,642,000 deemed to have been paid by NNPC was not swept from the CBN/NNPC Oil and Gas Account to the Federation Account as at 31 December, 2004. Ostensibly to cover up these monumental fraud, it was discovered the NNPC-COMD refused to keep ledgers in Abuja to track crude oil debtors, both foreign and domestic.
President Obasanjo’s administration was also characterised by diversion of funds meant for specific projects, lack of transparency in the execution of government projects and inflation of contract cost. One of such contracts was the Gurara Water Transfer Project designed to provide 880mcm of water to FCT and 30mw of hydro-electric power to Kaduna, as well as irrigate 2000 hectares of land for agricultural development. When the project commenced in December 2000, the cost of construction and supervision was put at N15.8 billion. But at the point of completion, the value had skyrocketed to an amazing N77 billion, no thanks to a Revised Estimated Total Cost, RETC, implemented midway into the project execution.
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In the same vein, the Obasanjo government also has questions to answer on the alleged N1 billion fraudulently diverted from the counterpart funding of the second phase of the National Rural Telephony Programme, NRTP. In a letter signed by Hon. Lekan Mustapha, Chairman, House Committee on Communication, titled “Observation of Funds Misappropriation,” the committee observed that the sum of N1 billion appropriated for the second phase of the NRTP in the 2006 Budget was under questionable circumstances diverted into payment of 15 per cent counterpart funding to the contractors. The legislators wondered why such diversion of fund could be made without recourse to the National Assembly, which was constitutionally empowered to approve such virement. To Mustapha, the diversion was more questionable considering the fact that the legislature had in 2004 approved the sum of N2.16 billion for the same purpose. The suspicion among the committee members was that the officials may have colluded with the
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