The just released audit report on Federal Government’s Consolidated Financial Statement for the year ended 31st December 2021 has indicted the Nigeria National Petroleum Company Limited (NNPCL), the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the Nigeria Downstream, Midstream Regulatory Authority for huge financial infractions and non-remittance of revenue to the federation account during the year under review.

The report, prepared by the Office of the Auditor General of the Federation and submitted to the Clerk to the National Assembly ,cited cases of unauthorised deduction from the federation revenue, irregular deduction from domestic crude sale, warehousing of the federation’s miscellaneous income, unsubstantiated payment of shortfall from the sale of MT Cargo of PMS, outstanding royalties due from NNPC-COMD/MCA/PSC, and unjustified deductions from Joint venture royalty by NNPC before remitting to DPR.

Also mentioned as financial irregularities in the report are outstanding royalties on oil concession rentals and gas flaring payable by operators to the federation’s account, outstanding bridging allowance from NNPC Retail, outstanding bridging claims from other major oil marketers, irregular balance in  marketers’ indebtedness and non-payment of indebtedness by some DAPPMAN marketers.

The Auditor General for the Federation, Shaakaa Kanyitor China, who signed the report said the actions of the three state owned agencies were in violation of paragraph 213(ii) of the Financial Regulations (FR) and paragraph 217 of the FR 2009.

While Paragraph 213 (ii) precludes withdrawal from the revenue account other than for the purpose of transfer to the consolidated account, Paragraph 217 stipulates that it is the duty of the Accounting Officer responsible for the collection of revenue or other monies due to government are correctly and promptly brought to account, whether such collections are payable direct to him or to a Sub-Accounting Officer or through any other channel.

In the case of NNPCL, the report said the company’s payment records for the period 2020 and 2021 revealed that N82,951,595,510.47 was deducted by it  from the sale of Crude Oil and Gas (Federation Revenue)  for “purported Refineries Rehabilitation”

It said there was no evidence of authorization and approvals before the deductions were made. The Auditor General attributed this kind of action to weaknesses in the internal control system at NNPC which could leave room for possible misappropriation of funds, diversion of revenue meant for the Federation or loss of Revenue.

It also reported that the management of the agency did not respond to audit query, adding that “since the Management failed to respond to the issue raised, the findings remain valid until the Management implements the recommendations.”

It recommended that the Group Chief Executive Officer of NNPCL be requested to provide reasons to the National Assembly for the deductions being proceeds from the sale of Crude Oil and Gas.

Besides, it said that henceforth, the management of the NNPCL should avoid making any deduction from monies due to go into the federation account and violation should attract punishment as specified in paragraphs 3106 and 3129 of the Financial Regulations 2009.

It also cited the deduction of N343,642,598,726.51 from the gross domestic crude sales in the name of NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.

The report said since details of each of the cost components deducted were not provided for audit review, the Auditor General could not understand the justification for the deduction.

The OAuGF also said that N83,659,813,739.99 being miscellaneous income from the NNPC joint venture operations from year 2016 to 2020 went into the CBN/NNPC sinking fund account instead of the Federation Account, adding that warehousing of the miscellaneous income of 2016 to 2020 meant for the Federation Account in the CBN/NNPC Sinking Fund Account led the government  to resort to borrowing to fund public  activities

It said the shortfall should be recovered and remitted to government treasury and evidence forwarded to the Public Accounts Committees of the National Assembly.

In another instance, a sum of N3,748,581,281.27 was said to have been paid to a company as shortfall on the sale  of MT cargo of PMS, adding that details of the transaction between the NNPC, PPMC and the company were not provided for audit.

It said whereas the sum of US$1,655,352,328.14 was supposed to have been paid  by NNPC  to the CBN account of the Department of Petroleum Resources (DPR) in respect of Production Sharing Contracts (PSC), Repayment Agreement (RA) and Modified Carry Arrangement (MCA) liftings as at 31st December, 2021, the DPR received only  US$1,401,399,635.07, leaving a shortfall of US$253,952,693.07.

It said further that records obtained from NNPC JV schedules and other documents showed that the NNPC deducted N204,853,744,047.39 from the Oil Royalty assessed by the Department of Petroleum Resources (DPR) for 2021 for alleged priority project, strategic holding cost, crude oil and product losses without any justifiable reasons.

It quoted the NUPRC as saying “the NNPC makes deductions for Government priority projects at source before remittance of royalty to NUPRC with the latter having no control over this. Thus, NNPC is in better position to provide necessary approvals to justify these deductions.

“The office of the Accountant General of the Federation has been duly written on the payment of 4% Cost of Revenue Collection to NUPRC for money deducted at source by NNPC for Government priority projects.”

The Auditor General said the Management failed to address the issue raised and therefore should provide reasons why the sum of N204,853,744,047.39 was deducted by NNPC from Federation Account revenue proceeds, while recovering the said amount and remit same into the Federation Account.

It said that a review of revenue ledgers for 2021 revealed that oil royalty amounting to US$1,742,280,008.32 remained unpaid by some oil companies as at the end of December, 2021, while an additional US$13,805,135.46 for revenue relating to Royalty on Gas Sales (Foreign) remained unsettled as at 31% December, 2021 in addition to N48,218,163, 192.67 for Gas Royalty (Local) for the same period.

[TheNation]

The North’s resentment of the proposed Tax Reform Bills currently at the National Assembly,NASS, has expanded as northern youths attacked Deputy Senate President Senator Barau Jibrin yesterday, accusing him of being insensitive to the region.

They described the bills as anti-North, saying it would further relegate the region economically.
The youths, representing 19 northern states, said the lawmaker representing Kano North Senatorial District knows the bills would not serve the region’s interest.

Ever since the proposed laws were sent by President Bola Tinubu to the National Assembly, lawmakers of northern extraction have been expressing worries.

The executive arm of government had said the bills would ensure uniformity in tax revenue administration across Nigeria, eliminate double taxation, use taxation to encourage private sector investment in critical industries and boost disposable incomes through targeted tax exemptions.

The four bills are the Joint Revenue Board of Nigeria (Establishment) Bill, 2024 -SB.583, The Nigeria Revenue Service (Establishment) BILL, 2024- SB.584, The Nigeria Tax Administration Bill, 2024-SB.585, and The Nigeria Tax Bill, 2024 – SB.586.

Last week, the bills passed Second Reading in the Senate despite notable objections from some lawmakers.
Senate Leader, Opeyemi Bamidele, described the proposed fiscal laws as “a significant move to overhaul the country’s tax system.”

However, the North is united in its opposition as all sections of its leadership consider the bills as being against the region’s socio-economic development.

The latest in the opposition by the North is the attack on Senate number two man, Senator Jibrin, by Northern Youth Assembly.

They were particularly angry over the fact that the Deputy Senate President presided over the sitting where the bills passed Second Reading.

The plenary was disrupted by anger and a shouting match over the bills, which came up for debate despite not being listed as an item for the day’s business.

Interest

In an open letter signed by Ali Mohammed Idris and Abdulhafiz Garba, President and Secretary respectively of Northern Youth Assembly, the youths said, yesterday, that Jibrin’s position on the bills doesn’t represent the interest of the North.

The letter reads: “The Northern Youth Assembly (Majalisar Matasan Arewa), on behalf of the 19 northern states leadership of the assembly, wishes to express our unequivocal disappointment and dismay in you, following your action towards the scaling for the second reading, of an evil tax reform bill, which would certainly undermine the North, and further relegate the region economically and commercially.

‘’Your support for the passage of the proposed evil tax reform bill put forth by the Tinubu administration is the highest order of your insensitivity to the economic and commercial plight of your constituency, Kano State and the entire Northern Nigeria.

“As representatives of the Northern Nigerian youths, we believe the proposed tax reform bill, in its current form, would surely disproportionately affect the economic livelihoods and aspirations of our people, and it is of course without taking into cognizance of the current economic reality in the country.

“Our disappointment is more on your attitude at the Senate plenary to impose your opinion and interest. Even though you are quite aware that this bill is anti-North and has the tendency of further impoverishing the people in the North, and would further cripple economic and commercial activities in the region, and yet you are hell-bent on making it a reality. While it is obvious that the proposed tax reform is of so much interest to the people at the centre, however, your unwavering enthusiasm to champion the bill, which is anti-North, exposes your misguided commitment to the course of protecting the interest of those you represent. Practically, the North faces a barrage of critical issues such as shortage of electricity supply, rampant insecurity across the region, naked poverty, unemployment and a dismal state of infrastructure, to name just a few, but you have yet resolved to lead the war of further destroying the little prospects left of the North.

“Let us remind you that the purpose of your election was to fundamentally champion the course to address the development challenges facing your region, through effective legislative engagement, rather than dedicating your energy to serve an anti-northern Nigeria agenda, which would further marginalize the Northern Nigerian people, the region where you come from. It would be wiser and more beneficial for you to prioritize your focus towards championing the course of alleviating the pressing socio-economic challenges ravaging the people in the North.

“This tax reform, in its current form, threatens to exacerbate the burdens of businesses and families in Northern Nigeria—that are already struggling to survive due to inconsistent power supply and un-friendly government policies which have been crippling the economy and growth of Northern Nigeria.

Lobbyists

“Northern Nigeria requires only the leaders who could speak in the interest of the region, not hired lobbyists and agents of destruction, who would do everything to misguide and deceive their people for some cheap political gains.

“We wish to inform you that the Northern Youth Assembly is highly disappointed in you and your cohorts for accepting to be engaged to destroy the north and its future.

“We are committed to fighting this course with our last drop of blood and to expose you and your likes, who are ready to auction the North and its future, as we could no longer trust and surrender our destiny into the hands of political merchants, betrayers and political hypocrites.

“The proposed Tinubu Tax Reform Bill is evil and that was the reason the National Economic Advisory Council and Northern governors rejected the bill in the first place, while people like you are trying to justify what is wrong in its totality to cash on the situation for some cheap political gain.
“We wish to finally advise you to change your ways before the entire people in the North, old and young, children and women are mobilised to place their curse on you.’’

[Vanguard]

Workers, senior lawyers and the civil society organisations (CSOs) have knocked the federal and state governments for failing to implement the Supreme Court judgement granting financial autonomy to local governments in Nigeria.

At the instance of a suit filed by the federal government against the 36 states of the federation, the country’s apex court on July 11, 2024, ordered that funds accruing to the councils from the federation account should be paid directly to the accounts of the third-tier of government.

But five months after the celebrated judgement, its implementation is still shrouded in secrecy.
Earlier media reports that the federal and state governments had set October 2024 deadline for the implementation of the ruling have been refuted by the attorney-general of the federation and minister of justice, Prince Lateef Fagbemi (SAN).

The reports claimed that at the expiration of the deadline, any state without elected leaders at the grassroots government would have the LG funds withheld by the federal government.
This made the governors to rush to conduct LG elections that were far from being credible

In an interview with LEADERSHIP Sunday on the issue, Mr Kehinde Eleja (SAN), said any further delay in the implementation of the Supreme Court’s ruling on local government autonomy would not portend any good for governance at the third-tier of government and would be a great disservice to the country.
Eleja who spoke in Ilorin, Kwara State said a period of five months after the delivery of the judgment was more than enough for necessary action to be taken by the government.

He said, “It would be recalled that the Supreme Court, in appreciation of the constitutional importance of the case to the nation, gave the case accelerated hearing and promptly delivered its verdict. With that the Supreme had discharged its responsibility leaving the executive with the implementation of the borders made in the judgment.

“As for the delay in implementation of the judgment, it must be appreciated that certain mechanisms would have to be put in place for effective implementation of the judgment. However, a period of five months after the delivery of the judgment is more than enough for necessary action to be taken by the government. Any further delay does not portend any good for governance at the third tier of government and will be a great disservice to the nation.”

In Zamfara State, the Nigeria Union of Local Government Employees (NULGE) and some lawyers condemned the delay in the implementation of the judgement, arguing that the delay had undermined the rule of law and the authority of the judiciary.

The state chairman of NULGE, Ahmed Isah, said the delay by the state governors was deliberate and accused them of selfishness.

A lawyer, Bello Galadi and former chairman of Zamfara State branch of the Nigerian Bar Association (NBA), condemned governors’ non-implementation of the autonomy granted the councils.

Galadi queried the delay despite the Supreme Court order that was made since July 11, 2024 which gave a landmark judgement affirming the financial autonomy of the 774 local governments in the country and ruled that governors could no longer control funds meant for the councils.

A legal expert based in Bauchi, Safiyanu Idris, blamed the federal government for the non-compliance with the judgement.

In an interview with LEADERSHIP Sunday in Bauchi, Idris said it was apparent that joint accounts became the medium for the governors to siphon funds meant for the local governments in their jurisdiction.

“The federal government failed to implement punitive measures on states that tamper with local government funds. It is not supposed to be so. Overzealous governors unlawfully use local government funds and sometimes go the extra mile to deal with council chairmen who, in their assessment, are against their greed,” he said

Idris advocated for the scrapping of state independent electoral commissions, arguing that governors use them to impose their loyalists as chairmen.

A Kaduna-based legal practitioner, Hiifan Abuul, said the joint local government account with the state government should be scrapped immediately following the Supreme Court ruling on local government autonomy.

Abuul however expressed reservation over effective management of local government funds by their chairmen, saying they were rather selected by their respective governors and not voted as witnessed during the local government polls across the country.

In Kebbi State, the chairman of the Association of Local Government of Nigeria (ALGON), Abubakar Nayaya Ambursa, said they would speak on the matter after the assembly concludes its deliberations on it.

Similarly, the chairman of the state chapter of NULGE, Comrade Abubakar Umar, said the union was waiting for the outcome of the state Assembly’s resolution on the matter.

The chairman of the Gombe State Network of Civil Society Organisations (GONET), Ibrahim Yusuf, said the main obstacle to the implementation of the ruling was the pervasive influence of godfatherism in Nigerian politics.

“The governors installed people as local government chairmen. We don’t call it an election because they appoint them. 99 percent of those installed were their political stooges or godsons who cannot do without their masters,” he said.

Also, Bachama Yusuf, secretary of the Association of NGOs (ANGO) in the state, corroborated the GONET’s stance, warning that the failure to implement the ruling would erode trust in the justice system and undermine democracy.

The North Central coordinator of Civil Liberties Organisation (CLO) Steve Aluko, said it was an affront on the judiciary because the highest court of the land had ruled.

According to him, the National Assembly had also made their input, but the executive had subverted the process.

Also, an Abuja-based lawyer, Francis Adejoh, said the Supreme Court is the highest court in the country and for the executive to have refused to implement the judgement was unfortunate.
He said, “It is very disappointing and embarrassing that the executive arm of government has refused to implement the judgement of the highest court in the land.”

The chairman of NULGE in Plateau State, Comrade Yohana Macquine, said the judgement was a welcome development.

When asked about his expectation from state governors on the judgement, he said he would not want to join issues with them, but said NULGE expected total compliance with the ruling.

The chairman, Cross River State Civil Society Network, Ben Usang, said the failure to implement the verdict portended danger because it would prompt people not to respect court judgments.

A legal practitioner and former chairman of the Special Investigation Panel for the Recovery of Public Property, Okoi Obono-Obla, said it was illegal and unconstitutional for a judgment of a court not to be obeyed immediately after the court made the pronouncement.

He said, “It is equally unconstitutional for the executive branch of government to be dancing “Ajasco” or rigmarolling or playing crass politics while obeying the judgment of the apex court in the country.

“This is a violent infraction of section 287 subsection 1 of the Constitution of the Federal Republic of Nigeria, 1999, which provides that the decisions of the Supreme Court shall be enforced in any part of the Federation by all authorities and persons and by courts with subordinate jurisdiction to that of the Supreme Court.

“It is simply outrageous, unacceptable, and scandalous, to say the least. It is a stain on the justice delivery system and goes to the root of the whole essence of adherence to the rule of law in Nigeria.

“It is also anathema to the principle of good governance, which is hinged on respect for the rule of law, constitutionalism, and democratic tenets. In other words, it is a recipe for bad governance.” Obla stated.

Meanwhile, councils in Jigawa State have been enjoying financial autonomy even before the recent court verdict in respect of the matter.

The state chairman of NULGE, Comrade Abubakar Garba Shittu stated this when contacted on the status of the local government financial autonomy in the state.

“We don’t have problems with regards to local government autonomy, even though the court verdict allowed states to continue to have much say on local government administration.

“In Jigawa State, local governments have been receiving their allocations but they pay back all the statutory deduction according to the state law,” he said.

Stakeholders have unanimously supported the delay in the enforcement of Supreme Court Judgement in Osun State.

While hoping that the judgement would be enforced to the latter in due course for good governance, they called for restraints in its immediate enforcement to avoid subjecting workers to hardship especially with the prevailing economic situation.

A local government staff at Obokun local government area of Osun State, Kunle Adeniyi, expressed the fear that if the judgement was enforced, it would be difficult for workers to receive their salaries.

A legal luminary, Bola Hammed, said due process of law should be taken in electing political officeholders at local government levels.

[Leadership]

The Central Bank of Nigeria (CBN) urges bank customers to report ATM and branch cash withdrawal difficulties starting December 1, 2024, through designated state-specific phone numbers and email addresses.

The CBN Governor Olayemi Cardoso announced this directive during the 2024 Annual Bankers Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.

Cardoso acknowledges cash availability issues at ATMs, which impact ordinary Nigerians. To address this, the apex bank will conduct spot checks on Deposit Money Banks (DMBs) and penalize underperforming institutions

“We recognize the ongoing challenges with cash availability at ATMs, which disproportionately affect ordinary Nigerians. 

“To address this, we are conducting spot checks across Deposit Money Banks (DMBs) and will impose penalties on underperforming institutions. 

“Effective December 1, 2024, customers are encouraged to report any difficulties withdrawing cash from bank branches or ATMs directly to the CBN through designated phone numbers and email addresses for their respective states,” he stated 

He assured that guidelines with reporting procedures will be widely distributed to raise public awareness.

Regulatory compliance and penalties 

Cardoso emphasized the need for compliance from all stakeholders, including Deposit Money Banks (DMBs), Mobile Money Operators, and PoS agents, to enhance service delivery.

“I repeat, financial institutions found engaging in malpractices or deliberate sabotage will face stringent penalties,” he warned 

The governor added that the apex bank would maintain a robust cash buffer to meet demand during high-pressure periods like the festive season.

To foster digital transactions and trust, Cardoso reiterated CBN’s commitment to addressing payment delays, particularly for vulnerable populations.

He explained that trust is fundamental to fostering digital transactions, and the CBN must take every necessary step to preserve that trust in payment systems.

Cardoso assured that Payment gateways for financial transactions will become better in 2025. Key initiatives under the Payment System Vision 2025 include:

• Implementing an open banking framework.
• Advancing contactless payment systems.
• Expanding the regulatory sandbox.
• Issuing revised guidelines for agency banking.

“Additionally, we will issue revised guidelines for agency banking and continue to strengthen electronic payment channels,” he stated 

Anti-money laundering and financial system reforms 

• Cardoso disclosed that Nigeria aims to exit the Financial Action Task Force (FATF) grey list by Q2 2025.
• He outlined plans to combat money laundering, cybercrime, fraud, and corruption, ensuring a sound financial ecosystem.
• Prof. Pius Deji Olanrewaju, President/Chairman of CIBN, praised the resilience of Nigeria’s economy and banking sector despite macroeconomic challenges. He highlighted steady GDP growth from Q1 to Q3 of 2024, attributing it to government policies and CBN initiatives.

“For example, the Nigerian economy continues to be more resilient and agile as shown in the steady growth from 2.98 per cent in Q1 to 3.19 per cent in Q2 and now 3.46 per cent in Q3 of 2024. 

“The bank recapitalization exercise also attests to the fact that we are well on our way towards not only strengthening the financial sector but also supporting a $1 trillion economy envisaged by 2030,” he said. 

Olanrewaju noted that the Nigerian banking industry has demonstrated resilience this year despite macroeconomic challenges, including rising inflation and exchange rate fluctuations.

[Nairametrics]