6 February 2014

Nigeria: U.S.$20 Billion Oil Money - Leakages in NNPC May Ground Economy - Sanusi

Reserve Bank Governor Lamido Sanusi

Governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi has stated that his decision to take part in the joint press briefing called by the minister of finance, Dr Ngozi Okonjo-Iweala, last December was in order to avert a crisis and calm nerves in the polity.

Sanusi also insisted that the persistent leakages in the amount of oil revenue remitted to the federation account if not stopped on time would ultimately bring the entire economy to its knees.

In an executive summary of his presentation to the Senate Committee on Finance, obtained by LEADERSHIP yesterday, the apex bank governor regretted that his letter to the president which was leaked last year was published in a highly politically-charged atmosphere leading to the Central Bank being practically accused of involvement in politics.

"In December it was clear to me that no tempered and positive discussion would take place. In order to calm nerves and avert a major crisis, I agreed to the joint press conference with the Finance Ministry, the Petroleum Ministry, and also to present a common front at the National Assembly."

At the said press conference which held on December 18, 2013, jointly addressed by Okonjo-Iweala, Sanusi, and minister of petroleum Mrs Diezani Alison-Madueke, Sanusi had said he was wrong in his earlier allegation that $49.8 billion was missing and that the actual unremitted amount was $12 billion. Okonjo-Iweala said her record indicated that only $10.8 billion could not be accounted for.

The CBN governor stressed that Nigeria cannot sustain the current trend in oil revenue leakages, adding that if not stopped it is capable of bringing the entire nation to its knees.

"The amount in 19 months may be $10.8 billion or $12 billion or $19 billion or $21 billion; we do not know at this point. But if we extend the period the amount will increase anyway, since this has been going on for a long time. The first priority is to stop it. It is unsustainable, and it will ultimately, if not stopped, bring the entire economy to its knees."

Sanusi who appealed to Nigerians not to disregard the alarm he raised as spurious or baseless also noted: "Since December, however, there has been an orchestrated campaign aimed at undermining our credibility and misleading Nigerians into believing that all monies due to the federation account have been either remitted or adequately accounted for."

He said that the decision on what to do with the situation at hand rests entirely with the government. "My task is limited to raising an alarm over what I think is a development that is harmful to the economy, and establishing that the alarm was neither spurious nor baseless. I still insist that an investigation is needed to establish the extent of the losses and nature of offences committed."

In related development, Sanusi also spoke at an investors' dinner in Lagos on Tuesday night, saying the revelation of the missing and unaccounted monies would help in ensuring good governance and accountability in the governing of the country.

Sanusi, who had made fresh allegations at a public hearing organised by the Senate, said that the NNPC was yet to account for $20 billion oil proceeds, an amount higher than the initial $10.8 billion that was in contention. He stated that "a lot of the noise that is happening in the country today around me and the oil sector is good for the country because, at the end of the day, if it leads to improved governance over oil revenue, if it leads to increased transparency or people having to be called to explain what they have done with the money, that is good for the system. People must not see controversy and noise as necessarily bad. I love controversy".

"If you think there has to be change and if you think a system needs to be improved and if you get too comfortable in a system, you should ask yourself what has happened to you. You need to step on a few toes, annoy a few people, have your own toes stepped on; you will be annoyed once in a while. Of course, they will slap you once in a while," he stated.

Stressing that the current market price of oil is in favour of the country, the CBN governor noted that revenue shortfalls arising from oil theft and illegal bunkering are the major challenge for the country, noting that if the problem of oil theft and illegal bunkering was solved, issues around reserves, currency stability and fiscal deficit would be a thing of the past.

"We have tried to build a stable environment, and, for us at the Central Bank, we have been very lucky to have had a very good partner in finance. If you look at government spending in 2013, it really wasn't much higher than in 2012 and fiscal policy is not in itself loose on the basis of government spending. The real challenge is that there are things that we can do to block some of the revenue shortfalls that are causing the problem - oil theft and bunkering -- because we've good oil price, we've got the output and if you fix that, the issues around reserves, around currency stability, around fiscal deficit would simply disappear."

He also blamed lack of fiscal discipline on the part of the government, saying "government spending itself has not been the problem. It is largely because of the fiscal discipline in the last few years that our tight monetary policy has been able to work. We have been able to bring down inflation to single digit and it has been below 10 per cent since January 2012. It would remain 10 per cent throughout 2014.

"I know there is speculation about how much money will come into the economy during elections, but how much money is there anyway? It's $2.5 billion in the Excess Crude Account. So even if people want to spend money, the money won't be available. So the risk from that end is not as high as people might think. The greater risk is if we continue to have deterioration in the revenue profile, and that can be addressed because it is really in our control."

Senator urges Nigerians to be vigilant on Sanusi's revelation

Reacting to Sanusi reveletion, Senator Olubunmi Adetunmbi (APC, Ekiti) has urged Nigerians to be vigilant.

Sanusi had alleged that $20bn oil funds from the federation account was still unaccounted for by the Nigerian National Petroleum Corporation (NNPC).

Adetunmbi said Sanusi's action was proper and urged Nigerians "to be vigilant in ensuring that the ongoing investigation into the allegation gets to its satisfactory conclusion".

The senator, who is the vice chairman, Senate Committee on Interior, said "time has come for Nigerians to be more interested in issues of public finance".

The ongoing controversy, he said, was a vindication of his position when he first raised the motion of urgent public importance on the unremitted funds on the floor of the Senate.

Adetunmbi said his action led to the sequence of events that uncovered the controversial issue of missing funds.

Nonetheless, he described as mischievous insinuations that the CBN boss was acting the script of the opposition with his action.

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