Senate queries CBN, Customs, others over poor revenue remittance - The Gallant News


Thursday, 2 September 2021

Senate queries CBN, Customs, others over poor revenue remittance

Senate queries CBN, Customs, others over poor revenue remittance

The lawmakers said within the last five to six years, CBN had not contributed anything.

The Senate on Wednesday queried some agencies for failing to remit their excess revenue to the Consolidated Revenue Fund (CRF) of the Federation.

The agencies are the Central Bank of Nigeria (CBN), Nigerian National Petroleum Corporation (NNPC) and the Nigeria Customs Service (NCS).

Chairman of the Senate Committee on Finance, Adeola Olamilekan, accused the revenue generating agencies for holding onto funds belonging to the federal government.

He made the allegation during a public hearing on the 2022-2024 Medium Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) organised by the Committee in Abuja.

The CBN, the panel said, has failed to remit their operational surpluses to the CRF over the years from it’s yearly budget of about N2.3 trillion budget.

Mr Olamilekan’s query was sequel to the presentation of the Director General of the Budget Office, Ben Akabueze, who also complained that some agencies had failed to remit revenues.

He said while the federal government is making efforts to grow revenue, some heads of agencies have assumed ownership and are spending such revenues illegally.

He, however, did not name the agencies.

In his reaction, Mr Olamilekan noted that some revenue generating agencies “spend their revenues hiding under the disguise that what accrued to them is not enough for them to carry out their functions, and so, they need to augment it with whatever they generate.”

“For every government agency that exist, it is expected that once you are coming to budget defence with your budget estimates, there should be a corresponding revenue estimate that you are contributing to the budget.

“…from the preliminary investigation carried out by this committee our findings are not palatable at all. A lot of heads of agencies have taken over the agencies as their personal property.

“They have decided to embark on a spending spree with nobody challenging them. We invited some agencies and discovered that since their existence, it was the first time anybody would invite them for an investigative hearing on how they have been doing concerning revenue generation.

“I give you an example, out of the 60 GOEs (Government Owned Enterprises), I can conveniently say that agency like the NNPC, I don’t know when last they contributed from their excess revenue into the Consolidated Revenue Fund, except recently when they declared profit and I know that profit will translate to payment into the CRF,” he said.

The lawmaker further said within the last five to six years, CBN had not contributed anything.

“They are here. If that is not a statement of fact, I will back it up with verifiable evidence.

“So, all these and more are issues bordering on the idea of let’s grow revenue. We are growing the revenue but some people are spending that revenue illegally.”

The CBN, however, denied the allegation saying “it is 100 percent not correct.”

The Deputy Governor of the CBN, in charge of Economic Policy, Kingsley Obiora, who represented the CBN governor, faulted the lawmakers’ claim.

He insisted that the apex bank has never defaulted in remitting 80 percent of its annual revenue surpluses to the CRF in accordance with the Fiscal Responsibility Act.

“We have in the last five years remitted our surpluses in accordance with the law. The CBN Act 2007 which you graciously passed stipulates that we transmit 75 percent of those surpluses but the Fiscal Responsibility Act which you again graciously passed, demands 80 percent. As responsible government agency, we follow the Fiscal Responsibility Act and we do remit 80 percent of our surpluses every year.

“The Ministry of Finance, Accountant General of the Federation and Budget Office will tell you they have no better friend than the Central Bank of Nigeria,” he said.

The CBN was thereafter, directed to produce documents to show remittances made by it over the years and make it available to the Committee not later than Friday.

They were also asked produce its audited account in the last five years as well as its position paper on monetary policy point of view on the 2022 – 2024 MTEF/FSP being considered by the committee.

In the same vein, the Nigeria Customs was found wanting with regards to revenue remittance.

But this time, the Comptroller General of the Nigeria Customs Service, Hameed Ali, expressed frustrations over the inability of his agency to raise enough revenue from taxes on import.

He asked the National Assembly to empower the NCS through appropriate legislation to collect excise duty on carbonated drinks.

“Today we have low production within the country and therefore we are unable to expand our excise duty base. We we are supposed to be collecting excise on carbonated drinks.

“The policy of government is to reduce consumption of items that are injurious to our health. That is why alcoholic beverages are being taxed and we are collecting it. Tobacco is being taxed and we are collecting it….All other carbonated drinks are also injurious to our health.

“So if we tax tobacco and alcoholic beverages, I see no reason why we should not tax the carbonated drinks. We have said this for the past five years I have been on this seat, and up till today we have not been able to get it. The reason I don’t know.

“My submission is simple. We will continue to rely on the unpredictable atmosphere to collect as much revenue as we can, but for us to be precise and more predictable, we must pay more attention to our industries and extract excise from them. That would be more predictable and much more realisable.”

But lawmakers said such an action could lead to the total collapse of the manufacturing sector which is currently struggling to survive the harsh economic situation in the country.

A member of the committee, Tokunbo Abiru, said it is not the appropriate time to implement such a policy in the country.

“At a stage where the industries in the country are struggling, equally disposable income is at a very low ebb right now, you don’t want to create a situation where people’s ability to produce is reduced.

“At the same time, I am mindful of the health implications that you have talked about but note that the people who drink carbonated drinks the most are young people and they still have the energy to burn them out.

“The older people drinking them should be guided rather than bringing a punitive policy that would slow down production. I just want us to be careful, this might not be the right time to do this,” he said.

For the NNPC, the Group Managing Director, Mele Kyari, in his presentation, lamented that the agency was spending most of its profit that should go into the federation account, to subsidise the petrol which runs into billions of naira every day.

He added that a larger percentage of the 60 million litres of the subsidised petrol being evacuated from the various NNPC depot did not represent the actual consumption saying it was being smuggled outside the country.

“Our efforts at raising revenue are being hampered by smuggling, round tripping, and other sharp practises.

“There is currently an inter agency collaboration to stop smuggling of the PMS but the reality is that the practice will continue in as much as there is a difference between the amount we sell in Nigeria and the price elsewhere.

“It is not beyond government but it is an extremely situation to manage. Any time the NNPC supply 60 million litres of PMS we will record shortage. As far as Sudan, you will see Nigerian subsidised PMS there and that’s the reality we are dealing with.”

Mr Kyari insisted that the lack of market for the nation’s crude oil occasionally had affects revenue and sometimes affects the projected oil benchmark.

The development, he said, had also forced Nigeria to embrace the OPEC resolution to cut down production so as to manage the prices in the international market.

While he identified vandalism and insecurity as factors affecting production, he explained that there was not definite time frame to exit the subsidy regime but expressed confidence that the implementation of the Petroleum Industry Act will ultimately provide useful solution.

When asked why the NNPC imports petrol at N250 per litre and sells at N162, Mr Kyari said, “not providing energy for Nigeria will be a breach of the law which establishes the NNPC.

“We will therefore continue to supply PMS to the Nigerian market at sub-market prices. What we have to do is to come back to the National Assembly to see how the narrative could be changed.”

He also said the alternative was to sell at the real market price so that money spent on under recovery could be shared to the three tiers of government to build infrastructure and provide other social amenities.

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