House to Probe CBN over Alleged $5bn Under-remittance to Federation Account

DPR: NPDC owes $17bn in royalties

James Emejo in Abuja

The House of Representatives wednesday passed a motion seeking to set up a high-powered ad-hoc committee to investigate the under-remittances of revenue by the Central Bank of Nigeria (CBN) and report back to the House in eight weeks.

The resolution followed a motion moved under matters of urgent public importance by Hon. Ayo Omidiran (APC, Osun) on the need to investigate the under-remittances of over $5 billion to the federation account by the apex bank.
In her submission, Omidiran noted that funds from the federation account are distributed to the three tiers of government in line with the revenue sharing formula of the revenue mobilisation committee enacted into law by the National Assembly.

She said the CBN being the banker of government, receives financial in-flows on behalf of the federation and should make same available on demand via federation account on monthly basis.
According to her, the CBN prepares the federation account instead of the Accountant General of the Federation (AGF).

The lawmaker expressed worry that the apex bank had taken advantage of the all-important function of warehousing funds for the tiers of government to manipulate the system by opening various accounts not known to the tiers of government where funds are remitted, hidden, diverted and spent without authorisation.

She said the CBN, in 2006, opened various accounts with JP Morgan Chase Bank in New York, USA, in which International Oil Companies (IOCs) remit all revenue for the federation.

“The CBN still operates an account with the Federal Reserve Bank of New York, USA, alongside that of JP Morgan Chase Bank from 2006 till date,” she added.

Omidiran said the CBN’s responsibility of receiving revenue in foreign currencies and concreting same to naira for the benefit of the tiers of government had led to substantial loss in amounts remitted to the federation account.
Furthermore, she expressed worry about the substantial difference between official exchange rate of the dollar to the naira and that at which the bureau de change (BDC) sell in the parallel market, whereas, it is the CBN that sells dollar to the BDC operators on a weekly basis as well as regulate the financial market.

She argued that in the recent past, the Federation Account Allocation Committee (FAAC) meetings have had to be postponed due to irregularities spotted in the federation account by the states.

She said the apex bank had violated Section 80 (2) of the 1999 constitution (as amended) by spending funds not appropriated by the National Assembly.

She expressed worry that the AGF had not reported these infractions of under-remittance of million of dollars and trillions of naira into the federation account by the CBN.

Arguing that the motion should be of great concern to the House, in view of the current revenue constraints for government, she said the issue should be investigated and possibly retrieve the monies.

She said the CBN takes 0.25 per cent of all foreign-dominated revenue as exchange commission for converting dollar to naira, noting that even after deducting the commission, the balance credited to the federation account at various times had been in negative difference, against expectations, and running into billions of naira per year.
Supporting the motion, Hon. Rotimi Agunsoye (APC, Lagos) said the matter must be looked into with all seriousness, particularly where the apex bank appeared to have usurped the role of the AGF.
“If they are not doing the right thing, we can’t go forward,” he said.

Meanwhile, the Department of Petroleum Resources (DPR) yesterday said the Nigerian Petroleum Development Company Limited (NPDC) is owing the federation account the sum of $17 billion being part of its outstanding royalties.
DPR Deputy Director, Planning, Mrs. Folashade Odunuga, disclosed this at a one-day public hearing on alleged infractions in the operations and activities of NPDC; the persistent lack of capacity and attendant revenue losses to Nigeria.

The hearing was organised by Chairman, House of Representatives Committee on Petroleum Resources (Upstream).
However, Managing Director, NPDC, Mr. Yusufu Matashi, who agreed that it owed the exact amount to the federal government, however noted that a payment agreement had been struck with DPR to offset the liabilities.

According to him, a payment plan whereby it will pay $10 million on monthly basis to DPR had already commenced, although the DPR deputy director said it was yet to receive notification on any payments yet.

Matashi said the company will welcome efforts by the House to salvage it having had a troubled past.
He said notwithstanding, the NPDC has develop expertise to participate in upstream sector.
He said Nigerians should be proud of NPDC despite its chequered history.

He said: “We have had our challenges but the company has seen meteoric growth in assets.”
Nevertheless, the hearing couldn’t really progress as the committee was unsatisfied with the manner with which the NPDC management submitted relevant documents demanded by the former.

The committee, therefore resolved that the NPDC should be made to return on a yet to be disclosed date with a comprehensive document which is neatly paginated for proper perusal.