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Senate express fears SEC May Liquidate By 2023

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***As Commission records N12.37 Billion Budget Deficit in 3 Years

The Senate on Thursday has expressed apprehension that the Security and Exchange Commission (SEC) may liquidate by 2023 following revelations by the Director General, Lamido Yuguda.

The DG at an interactive session with members of the Senate Committee on Finance, National Planning, Foreign and Local Debt; Banking, Insurance, and other Financial Institutions; Petroleum Resources (Upstream), Down Stream; Petroleum Sector & Gas; disclosed that the agency has been operating a deficit budget over the years.

Yuguda revealed that from January 2021 to June 2021, the Commission realized a revenue portfolio of N11.6 billion, while recording a total expenditure of N16.67 billion, leaving behind a balance of N5.17 billion.

He said that the situation was caused by a market meltdown and the Covid-19 pandemic.

According to him, SEC is overburdened by a staff strength of 544 including pension for retired officers, and a personnel cost of N10.322 billion.

He stressed that since June 2020 SEC has been paying 25 per cent of its Gross revenue of N 1.5 billion to the national treasury.

The SEC DG who claimed that the Commission has an investment portfolio of N6 billion with the Treasury Single Account including ownership of Government Treasury Bills, could however not provide explanations on the sources of the monies used by the Commission to fund its budget deficit.

In his remarks, the Chairman of the Committee on Finance, Sunday Adeola (APC Lagos State) criticized the commission’s unsubstantiated budget remarks, condemning the DG’s inability to provide proof showing how SEC funds the budget gap.

Adeola noted “that in the last three years the personnel cost has been on the increase. Your salary profile, your top half of the profile is talking about 70% of total emolument of N9 billion, only 30% go to lower cadre. We should know what is happening. This is the second year you are coming with a deficit budget.”

A member of the Committee, Senator Tokunbo Abiru (Lagos East) lamented that the returns generated by the commission “is way below its expenditures.”

He pointed out that “as a regulator to businesses making profit and you’re not making profit, it is a challenge.”

According to him, “in 2019 you have a deficit of 2.9 billion, 2020 you have 4.3 billion and the returns you are getting from these investment securities are way below what can fund it. So it is either you are borrowing money somewhere to fund these operations which I honestly think is not the best thing to do.”

So, I think that part of what you should be thinking of is how do you right-size your operations within the limit of the revenue that you can generate.”

Contributing to the debate, former Borno State governor and a member of the Committee, Senator Kashim Shettima lamented that “in the next two years you are going to go bankrupt. Right now you are in deficit and unless you come up with solutions you will become insolvent; incapable of honouring your obligations.

He urged the DG to think outside the box and stop proffering excuses.

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Legislature

Senate approves 2022-2024 MTEF/FSP, okays N13.98trn budget projection for 2022

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***endorses USD$57 per barrel oil benchmark, N410/US$1 Exchange rate

All is now set presentation of the 2022 Appropriations bill to the National Assembly by President Muhammadu Buhari as the Senate on Wednesday approved the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).
This is in tandem with the 9th National Assembly resolve to stick to the January to December budget cycle.
 
The passage of the 2022-2024 Medium Term Expenditure Framework was sequel to the consideration and exhaustive deliberation of a report by the Joint Committees on Finance; Local and Foreign Debts; Banking, Insurance and other Financial Institutions; Petroleum Resources (Upstream); Downstream Petroleum Sector and Gas. 
 
The Joint Committee report was presented by Senator Solomon Olamilekan Adeola (APC, Lagos West), who chairs the Finance Committee. 
 
The chamber during consideration of the report gave its nod to the Federal Government’s revenue projection of N8.36 trillion; and proposed expenditure of N13.98 trillion.
 
Accordingly, it also approved the daily crude oil production of 1.88mbpd, 2.23mbpd, and 2.22mbpd for 2022, 2023 and 2024, particularly “in view of average 1.93mbpd over the last 3 years and the fact that a very conservative oil output benchmark has been adopted for the medium term in order to ensure greater budget realism”. 
 
The Senate in its recommendations approved the Benchmark oil price of USD$57 per barrel; adopted the Exchange Rate of N410.15/US$ by the Executive for 2022-2024; and gave its nod to the projected Gross Domestic Product (GDP) growth rate of 4.20%; as well as 13% inflation rate.
 
In addition, the chamber approved fiscal deficit of N5.62 trillion; new borrowings of N4.89 trillion – an amount which includes Foreign and Domestic borrowing – subject to the provision of details of the borrowing plan to the National Assembly. 
 
The Senate also approved other parameters such as Statutory transfers totaling N613.4 billion; Debt Service estimate of N3.12 trillion; Sinking Fund to the tune of N292 billion; Pension, Gratuities and Retirees Benefits of N567 billion.
 
Out of the Aggregate Federal Government’s Expenditure of N13.98 trillion, the upper chamber approved the sum of N6.12 trillion for Total Recurrent (Non-debt); N3.47 trillion as Personnel Cost for Ministries, Departments and Agencies (MDAs); N3.26 trillion for Capital Expenditure (exclusive transfers); N350 billion Special Intervention (Recurrent); and N10 billion for Special Intervention (Capital). 
 
The upper chamber in its report recommended that the Fiscal deficit estimate of N5.62 trillion also be sustained due to the Federal Government’s conservative approach to target setting and its determination to improve collection efficiency of major revenue generating agencies. 
 
It further called on the Salaries and Wages Commission to review the salary structure of all Ministries, Departments and Agencies (MDAs), in other to come up with a new salary structure that will reflect the true financial position of the Agencies.
 
The chamber also demanded a continuous review of the Fiscal Responsibility Act to ensure that all revenues are remitted to the Consolidated Revenue Fund (CRF) as at when due, in order to curtail frivolous deductions and diversion of funds by the MDAs.
 
It further maintained that all laws relating to mining businesses be reviewed as a matter of urgency, to ensure upward review of rates applied to royalties, ground rent and licenses renewal of all mining companies operating in Nigeria to ensure transparency in the collection of revenue by relevant agencies, as well as recommend stringent sanctions in proposed new laws to address illegal mining.   
 
The Senate amid its recommendations also called on the Nigeria Customs Service to accelerate the process of installing scanners at all ports across the country to curb the issues of smuggling and underpayment of custom duties on imported goods which has resulted in huge loss of revenue to the government.
 
It also charged the Federal Government to urgently implement the Petroleum Industry Act recently assented to by the President in order to curtail the problems of smuggling and round-tripping of petroleum products imported into the country. 
 
In addition, the chamber recommended that the proposed budget of Government Owned Enterprises (GOEs) be reviewed upward to show the reflection of their capabilities to generate more revenue as a result of the findings of the Joint Committee. 
 
Consequently, it further recommended that the offices of the Accountant General (AGF), Auditor General of the Federation (AuGF) and Fiscal Responsibility Commission be strengthened in the area of staffing and proper funding of its activities to ensure optimal performance of their duties in order to adequately monitor the remittances of all government revenue. 
 
The chamber posited that the Act establishing some MDAs such as – Nigeria Investment Promotion Council (NIPC), National Lottery Trust Fund Act, Bank of Industry Act, Bank of Agriculture Act, Energy Commission Act and Nigeria Nuclear Regulatory Commission – if  reviewed and amended as a matter of urgency, would assist to generate more revenue to the coffers of government. 
 
It also recommended that  the Federal Government budget be reviewed and purged of some agencies with demonstrated capacity to stand on their own without any recourse to Federal Government of Nigeria budget. 
 
The chamber gave example of such agencies to include the National Agency for Food and Drug Administration and Control (NAFDAC) and Nigerian College of Aviation Technology, Zaria.  
 

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Legislature

Buhari asks Senate to confirm EFCC board members

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President Muhammadu Buhari on Tuesday sent a request to the Senate for the confirmation of the appointment of the Secretary and Board members of the Economic and Financial Crimes Commission (EFCC)

The request was contained in a letter dated September 17, 2021, and read during plenary on Tuesday by the Senate President, Ahmad Lawan.

President Buhari explained that the request for the confirmation of the nominees was in accordance with the provision of section 2(1) of the Economic and Financial Crimes Commission (Establishment) Act, 2004.

Those to be confirmed include George Abbah Ekpungu, Secretary (Cross River); Luqman Muhammed (Edo); Anumba Adaeze (Enugu); Alhaji Kola Raheem Adesina (Kwara); and Alhaji Yahaya Muhammad (Yobe). 

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Legislature

35 days after assenting to PIA Senate gets Buhari’s request for amendment

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About one month after assenting to the Petroleum Industry Act (PIA) 2021, President Muhammadu Buhari is asking the Senate to amend the act that was passed by the National Assembly over two months ago.

On 16th August 2021, President Muhammadu Buhari signed the Petroleum Industry Bill 2021 into law.
The signing of the Bill into law by the President was in furtherance to the passage of the Bill by both the Senate and the House of Representatives earlier in July 2021.
The PIA is expected to grow investors’ confidence in Nigeria’s Petroleum Industry and create more employment opportunities for the populace in the host communities.
 
The President”s request was contained in a letter dated September 16, 2021, and read during plenary on Tuesday by the Senate President, Ahmad Lawan.

President Buhari in the letter explained that the appointment of two non-executive members as provided for by the Act to the board of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NPRA) and Upstream Regulatory Commission (URC) does not reflect balanced geopolitical representation. 
 
He, therefore, requested amendment to Sections 11(2)(b) and 34(2)(b) which provides for the Administrative Structure of the PIA 2021, to increase the number of the non-executive members from two to six on the boards of the NPRA and URC.
 
According to him, doing so would foster national unity and “provide a sense of participation and inclusion to almost every section of the country in the decision making of strategic institutions such as the oil industry”. 
 
In addition, the President proposed a deletion of Sections 11(2)(f), 11(2)(g), 34(2)(f) and 34(2)(g) from the Petroleum Industry Act, which would see to the removal of the Ministries of Petroleum and Finance form the Board of the Nigerian Petroleum Regulatory Authority and Upstream Regulatory Commission.
 
He explained that, “The proposed amendment will increase the membership of the board from nine (9) to thirteen (13) members that is representing 44 percent expansion of the board size.   
 
“This composition would strengthen the institutions and guarantee national spread and also achieve the expected policy contributions.
 
“The two ministries already have constitutional responsibilities of either supervision or inter-governmental relations. They can continue to perform such roles without being in the board. 
 
“It is also important to not that administratively, the representatives of the ministries in the board will be Directors – being same rank with Directors in the institution. This may bring some complications in some decision making especially on issues of staff related matters.”
 
He also sought an amendment to Sections 11(3) and 34(3) to be replaced with a new section that provides that appointments to the Board of the Commission or Authority under section 2 shall be made by the President, while those made pursuant to subsection (2)(a), (b) and (c) of section shall be subject to confirmation by the Senate. 
 
The President further requested that Section 41(2) of the Petroleum Industry Act be replaced with a new section as “there shall be five (5) executive directors for the Authority whose appointment shall comply with the rules of the Federal Civil Service with each responsible for one of the following.”
 
The President, in his proposed the amendment, underscored the need to exempt serving public officers from the established confirmation process for political appointments. 
 
“This will ensure effective management of the regulatory institutions through uniform implementation of public service rules for employees of the Authority. 
 
“In future, these positions will obviously be filled by the workers in the Authority through career progression in conformity with the rules and regulations of the Federal Civil Service”, Buhari said

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