6 February 2014

Nigeria: Oil Funds Remittance - Why I'm Campaigning for Accountability, Says Sanusi

Reserve Bank Governor Lamido Sanusi

Central Bank of Nigeria (CBN) Governor, Mallam Sanusi Lamido Sanusi, has given an insight into why he is on a campaign for transparency and accountability in the management of proceeds from crude oil sales.

Sanusi, who on Tuesday stirred the hornet's nest again over the alleged non-remittance of $20 billion oil revenue by the Nigerian National Petroleum Corporation (NNPC) to the Federation Account, said at the Standard Bank West Africa Investors' Conference dinner in Lagos that although many people would regard him as a noise maker, the noise he was making is for the good of the country. He spoke at the dinner later on Tuesday after his appearance before the Senate Committee on Finance, which held a public hearing into his earlier allegation that the NNPC had not remitted $49.8 billion into the Federation Account.

It was at the public hearing in Abuja where he claimed that the unremitted funds, which had stood at $10.8 billion after reconciliation, are now $20 billion, a claim which the NNPC has disputed.

Besides, in the executive summary of his presentation to the Senate committee, a copy of which THISDAY obtained yesterday, Sanusi also called on the federal government to stop oil swaps and effectively monitor NNPC's management of the 444,000 barrels of oil it lifts daily for refining for local consumption.

The CBN governor told guests at the dinner that the disagreement over the alleged non-repatriation of oil revenue to the Federation Account by the NNPC would eventually bring about accountability and good governance in the management of oil revenue.

He said: "People must not see controversy and noise as necessarily bad. I love controversy. 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.

"If you think there has to be a 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 and that is fine."

Sanusi told the gathering of international investors that one of the risks faced by the country was the decline in its revenue profile, describing it as a challenge that could be addressed.

He however acknowledged the efforts being made by the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, in curtailing government spending.

"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 revolve around currency stability, around fiscal deficit would simply disappear. But 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," he added.

He also said there had been speculations about excess money in the system as a result of the 2015 elections.

"But how much money is there any way? Its $2.5billion 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," he said.

However, in the executive summary of his presentation to the Senate Committee on Finance in Abuja on Tuesday, a copy of which THISDAY obtained yesterday, Sanusi asked the federal government to terminate all crude oil product swaps and crude exported and sold at market price.

He also suggested that NNPC should stop collecting 440,000 barrels per day (bpd) as "domestic crude", saying that that amount of crude oil should be reduced to the refining capacity of the corporation's refineries based on a signed refining contract that clearly states what products are to be delivered for each barrel.

He said: "Where NNPC needs to generate cash flow to fund PMS imports, it can 'borrow' crude, on the approval of the finance minister, for 90 - 120 days.

"This crude is to be valued at the ruling market price. NNPC may sell the crude, import PMS and sell through its outlets. It should claim subsidy from Petroleum Products Pricing Regulatory Agency (PPPRA) like every other marketer and present all required documents. Thereafter, NNPC should pay back the full value of crude lifted to the Federation Account and retain the profit. Where NNPC delays payment, the amount outstanding should attract interest at commercial rates until payment."

According to him, NNPC should be made to account for subsidies claimed in 2010-13 by producing documentary proof of legitimacy.

He also called for investigation into all Strategic Alliance Agreements (SAAs) that Nigerian Petroleum Development Company (NPDC) had entered into "for constitutionality".

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