Budget 2022: Echos from Reps, engagement of MDAs
For nearly two weeks, the House of Representatives’ finance committee engaged government ministries, departments and agencies (MDAs) on the 2022 budget. PHILIP NYAM reviews the fiscal year
Although the National Assembly is currently on annual recess, the House of Representatives Finance Committee headed by Hon. James Faleke (APC, Lagos) interacted with government ministries, departments and agencies (MDAs) to review the 2022-2024 Medium Term Expenditure Framework (MTEF) and Budget Strategy Paper (FSP). The exercise, which took place over a two-week period, saw committee members reviewing proposals from various MDAs as well as asking questions and seeking clarification.
The committee also made some revelations, and in some cases disagreed with MDAs on their financial management, revenue generation, and the target for 2022 and beyond. The committee noted flaws in the way some government revenue-generating agencies violate the constitution by refusing to pay into the Federation’s account. Faleke in his closing remarks at the end of the interaction said: “The agencies have leveraged their acts of establishment to spend their Internally Generated Revenue (IGR), thus depriving the government of necessary revenue.
“The committee has determined that some of these acts are selfish and against the national interest. The need to quickly amend such acts cannot be overemphasized. The committee is also concerned about the agencies’ blatant disregard for existing laws, in particular the Constitution of the Federal Republic of Nigeria 1999 (as amended). The income-generating agencies have refused to remit the income owed to the federal government of Nigeria. “The action, so to speak, is straining the resources that would normally be available to enable the government to pursue its development goals.
Government agencies engage in extra-budgetary spending contrary to the Constitution and the Fiscal Responsibility Law. “Some agencies under-report the actual income generated. Some agencies that have yet to appear before the committee will be invited back to appear when the House of Representatives resumes, otherwise our recommendations could include removing their capital and overheads from the 2022 budget. ”
The committee, in its interaction with the Petroleum Product Price Regulatory Agency (PPPRA), vowed not to capitulate in its quest to determine the actual volume of Premium Motor Spirit (PMS) and other petroleum products consumed. in the country.
The committee frowned at the failure of PPPRA executive secretary Mr. Abdulkadir Saidu to appear as scheduled and threatened that the committee would activate relevant sections of the constitution to compel his appearance. Although the committee was not satisfied with most of the MDAs, it praised the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, for providing detailed explanations on certain questions concerning the petroleum industry.
Kyari, in his presentation, provided a medium-term base oil price scenario as follows: $ 57 per barrel for 2022, $ 61 per barrel for 2023 and $ 62 per barrel for 2023. In order to curb product smuggling tankers, the NNPC said. it will now deploy technology to monitor fuel distribution across the country.
The NNC GMD noted that with electronic monitoring, every truck carrying fuel would be visible as it unloaded its load and would see all gas stations as it unloaded. He said national fuel consumption per day may not exceed 60 million liters as has been speculated, however adding that any time the NNPC supplies less than that there would be a problem.
The NNPC boss revealed that President Muhammadu Buhari had asked him to take action that will reduce cross-border smuggling, while admitting that challenges posed by land borders help smugglers’ activities. According to him, the company is already urging the government of the Republic of Niger to establish an NNPC retail outlet in order to curb the activities of smugglers. He said the country might not exit the fuel subsidy regime until 2023, when the Petroleum Industry Act (PIA) is fully activated. Kyari said NNPC’s decision to be a member of the Dangote refinery board is a calculated attempt, adding that Nigeria does not have strategic storage to date.
“We’re interested in the Dangote refinery, but so far he doesn’t want us to take 50% of the equity and it’s been structured around him buying 3,000 barrels of crude a day from us.” , did he declare. The GMD also noted that contrary to the insinuation, the NNPC had not abandoned the country’s refineries and it was not about taking out a $ 500 million loan to repair them. He said none of the country’s refineries have undergone full-scale rehabilitation since 2000. While the NNPC has been praised, the Commercial Affairs Commission (CAC) has been beaten for not submitting its financial statements. for the period 2016-2020.
As a result of the development, the committee threatened to withhold further budgetary allocations to the committee until it submits the report in question. Faleke lamented that from the documents submitted by the ACC, it was evident that his income had always been lower than his expenses from 2016 to 2020. “I worked in private organizations before coming to the House of Representatives and they will always pay their expenses. and not spend more than what they generate. In your case, you borrow money up front before the money even arrives. You will therefore have to submit your 2016-2020 financial report before obtaining a hearing for the 2022 budget.
“You spent what you don’t generate. This agency needs a total overhaul to get back to what it is meant to be. Today all registrations are done online, but you still have unbearable overheads, things need to change, ”he said. He also ordered the Federation’s Budget Office not to receive a budget request from the ACC until it made its files available to the committee.
CAC Registrar General Alhaji Abubakar Garba explained in his presentation that most of the expenses were used to settle unpaid debts. He said that in 2020, the Commission had 2.024 billion naira in liabilities, which it must compensate by insisting that the financial position of the commission is sound. Like the CAC, the Nigerian Customs Service (NCS) has seen its revenue target of 1.33 trillion naira for fiscal year 2022 denied.
The committee made the decision, following a comment from the Chairman of the House of Customs and Excise Committee, the Hon. Leke Abejide (ADC, Kogi). In reviewing the NCS presentation, Abejide noted that with the recent devaluation of the naira, the NCS proposal is expected to be above 2,000 billion naira.
He said the exchange rate for 2021 was N381 to the dollar and the target revenue generation was N1.6 trillion, adding that the service should take into account the devaluation of the naira and increase its target. According to him, the NCS would still exceed an upward revision target, adding that the new finance law had allowed the service to generate more revenue from alcoholic beverages and tobacco compared to 2021. Supporting Abejide’s position , Faleke said it is an established practice that at the start of each year, the budget office takes a critical look at the expected revenue generation of the country. He said: “For us as the finance committee we will not accept the 1.3 trillion naira, I am sure that by the time our report comes out you will be pleasantly happy,” he said. he declares.
The commission also promised to initiate the amendment of the finance law to include levies on all carbonated and non-carbonated drinks. The assurance followed a request from the comptroller general of the Nigerian customs services, Colonel Hameed Ali (rtd), that all beverage companies should be required to pay taxes. Ali had told the committee that he had advocated that soft drinks be re-excised. He said non-alcoholic drinks are as harmful as alcoholic drinks, noting that there is a 30% excise tax on alcoholic beverages.
“In several cases, I made submissions. My chairman (Leke Abejide, the Chairman House Committee on Customs & Excise Duties) is aware that I have been part of this battle for us to reconsider the companies that were de-excised in 2019. “What we are fighting for is that if alcohol drinks and tobacco are harmful to our health and that is why the government has decided to tax them, soft drinks are also harmful to our health and they should be taxed.
“I have been singing this song for many years now, Coca-Cola produced in this country and it is not taxed. There is nowhere in the world that Coca-Cola does not pay taxes to its host country, but Coca-Cola in this country does not pay anything because of the government’s refusal to re-excise these companies. For us, we are fighting for this, and I hope that one day we will start to collect, ”Ali said. Following his submission, Faleke assured that the committee would consider amending the finance law in line with the arguments of the Customs CG. ” We are going to think. I am sure the federal government will bring forward the 2022 finance bill.
It is necessary that we examine the possibility of levying excise duties on all drinks produced in this country, that is, on all drinks, carbonated and non-carbonated. “Carbonated is already part of the finance law, but businesses cannot operate and make huge profits. We are talking about excise.
I’m sure they pay their income tax, but in terms of production tax; even non-alcoholic ones are harmful, if you drink too much it is a wahala (problem). You will only be consuming sugar, ”he said. Also arguing for the beverage tax, Abejide said the government needs to start implementing the soft drink tax. “Customs are doing well and I’m happy. This finance law that we passed in 2020, we should try to make it work for soft drinks. It is already there as a law.
Customs should partner with the Ministry of Finance to get approval to start collecting, so they can take action and start collecting. If we apply this law, it will be very easy to see. Even if it’s not up to 2.5 trillion naira, at least they can cross it, ”he said. The committee is expected to present a full report of its findings and recommendations to the House, when the National Assembly meets again this month.
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