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Money, money everywhere and yet more debt!!

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By Henry Boyo

THE IMF Country Chief, Amine Mati, who spoke at the presentation of the Regional Outlook for Sub-Saharan Africa, in Abuja, last Thursday (November 8, 2018), was clearly concerned that, despite Nigeria’s very modest projected growth rate of about 1.9 per cent for 2018, and debt to GDP ratio between 20-25 per cent, unfortunately, however, Nigeria already also allocates more than 50 per cent of its revenue to debt service annually.



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Consequently, according to the IMF, public debt is, oppressively, diverting more resources towards debt servicing. Furthermore, Mati, also observed that interest rates have, regrettably, also “gone up to where they used to be” before the ‘celebrated’ debt relief to several African countries, including Nigeria, just over 10 years ago.

Conversely, Patience Oniha, the Debt Management Office’s D.G, however, affirmed at the above event, that without sufficient revenue and the recession that the country found itself in between 2016-17, the government had no option than to borrow to increase forex availability and also “spend the country’s way out of recession.” Oniha, therefore, disclosed that despite the allegedly precarious, present, debt burden, decried by IMF, government proposes to borrow N1.5tn in 2019, even when, the impact on infrastructure of the N2.5tn and N1.64tn, that government borrowed in 2016 and 2017, respectively, has sadly, remained marginal!

It is arguable, nonetheless that with due diligence, in procurement contracts, for infrastructure and other expenditure estimates, government’s annual budget would be spared this “excessive” level of borrowing. To this end, 10 Civil Society Organisations, for example, have jointly signed a petition for EFCC to probe why GE, the US Giant Corporation, supplied 18XGE Frame 126MW turbines for $404m, while the same company supplied 9XGE Frame of same turbines of 126MW, through Rockson Engineering at “a whopping sum of $1.55bn”; in this event, GE and Rockson may have defrauded Nigeria of about $1.348b.

Incidentally, the National Assembly is investigating the allegation against GE/Rockson Engineering, “because of the fear that, should Nigeria do nothing, the United States Government may invoke the “Foreign Corrupt Practices Act” (which forbids US Companies from Acts of corruption anywhere in the world) to prosecute GE if found wanting.” “This according to NASS, may cause Nigeria great embarrassment, just like the notorious ‘Halliburton case’.”

Similarly, earlier this month, November 2018, the Senate, also began an investigation of the diversion of “$1.05bn from the Nigerian Liquefied Natural Gas ‘Dividend Account’ by the NNPC.” The Group Managing Director, Maikanti Baru, readily admitted, at a Senate Committee hearing, on the issue, that NNPC has utilized that fund to augment “under-recoveries from the importation of petrol.” Maikanti Baru also insisted that “the NNPC acted in line with a National Assembly directive to do everything necessary to end the scarcity of fuel between December 2017-January 2018”; besides according to Baru, NNPC’s action “was also in line with Section 7(4) (b) of the NNPC Act which mandated it to fund its operations from its revenue.”

However, Senate President, Bukola Saraki, declared that “it was illegal for NNPC to unilaterally draw from the NLNG dividend funds, without prior appropriation by the National Assembly. Saraki insisted that “dividends paid to the Federal Government from LNG business were supposed to be kept in the Federation Account and shared among the three tiers of government.” Furthermore, Senator Bassey Akpan, the Chairman of the Senate Committee on Gas also noted that “utilizing the funds without appropriation, and without the knowledge of State and Local Governments was an illegal act that should not be overlooked.”

Incidentally, in addition to the LNG dividend of $1.05bn, the Senate Majority Leader, Senator Ahmed Lawan, is reportedly, also already leading an Adhoc Committee set up on October 16, 2018, to look into the “alleged secret spending of $3.5bn by the NNPC on fuel subsidy.” The related question thrown up from the above, clearly relate to whether the diversion of $1.05bn from the LNG dividends account was a one off event, or the usual practice over several years.

Instructively, however, in April, this year (2018), Dr. Waziri Adio, the Executive Secretary of “Nigeria’s Extractive Industries Transparency Initiative,” revealed, at a meeting with Civil Society and Media Organisations, that NNPC has confirmed that “the NLNG’s $16.8bn accruable dividend between 2000-2015 was not remitted to the Federation Account.” However, in defence of the non-remittance, the NNPC alleged that it got a letter from the Presidency, “that it should hold the money in trust, and it should spend as directed.”

Conversely, however, NNPC is yet to furnish NEITI with a copy of the alleged instruction from the Presidency. Regrettably, furthermore, according to NEITI Secretary, “the Department of Petroleum Resources (DPR) does not yet have metering infrastructure;” consequently, “we cannot independently say this is how much oil we produce even though we may know how much we actually sell officially.” Furthermore, NEITI has also questioned “the proprietary of NNPC’s retention of 450,000 barrel/day allocation to domestic refineries, when in fact, they refine little or nothing!”

Femi Falana, a distinguished Civil Rights and Legal activist, also noted at the NEITI briefing that, a team of Lawyers including himself, discovered that “between January 2011-December 2014, the export of 60.2 million barrels of oil valued at $12.7bn was not recorded here in Nigeria, but was captured, for the purpose of taxation, at the point of discharge in Philadelphia USA.” According to Falana, “if you take all the ports, in the US alone, where our oil was discharged, at that period, I am sure Nigeria will make about $200bn, even when other destinations such as China, India, etc, were not also captured. Regrettably, the EFCC and the Finance Minister, are yet to respond to Falana’s petitions.

Similarly, a ‘ThisDay’ publication of May 17th 2018, also reported that Abdulaziz Yari, Zamfara State Governor and the Chairman of the Governors’ Forum, has dismissed NNPC’s claims of petrol consumption of 60million litres/day, since the commencement of the new regime of cost recovery (i.e. direct deduction of petrol subsidy from NNPC sales revenue). According to Yari, 60million litres/day is, allegedly, more than the consolidated fuel requirements of Nigeria, Cameroon, Ghana and Niger!

Surprisingly, nonetheless, rather than plug the huge leakages of unaccounted government revenue, government conversely, seems inexplicably more focused, on gleefully increasing the National debt burden, even when, according to the IMF, Nigeria already applies over 50% of aggregate revenue to service, clearly, oppressive debts which will invariably mortgage the future of millions of Nigerians yet unborn.

Furthermore, it is inexplicable and possibly also reckless to have doubled our debt burden in the last 3 years and, yet still, seek foreign loans with 7% interest rate, when infact, CBN ironically continues to freely auction its relatively bountiful foreign reserves for free, while the Government borrows domestically at double-digit interest rates, even when CBN also gleefully sits on a pile of sterilized Naira loans which attract double-interest rate!!!

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