Nigeria: Organised Private Sector Backs 50 Percent Resource Control
June, 06th 2008
THE Organised Private Sector (OPS) has thrown its weight behind resource control, calling for a new revenue allocation formula that will give the federal and state governments 50 per cent share each of the federation account.
This is one of the several submissions made by The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) to the Federal Government to mark President Umaru Yar' Adua's one year in office.
Wants 50:50 revenue sharing between FG, states
It said: "The sharing of the proceeds from resources between the federal, state and local governments should be 50:50.
This will reduce the over dependence of states on Federal Government. The state governments should also share with relevant local governments on 50:50 basis, and local governments with wards, wards with communities, communities with families and families with their individual stakeholders.
"It could work out like this: FG and SGs 50:50 or 50% each; SGs - LGs 50:50 or 25% each; LGs - Wards 50:50 or 12.5%; " Wards - Communities 50:50 or 6.25%; Communities and Families 50:50 or 3.125%; Families and individual Stakeholders 50:50 or 1.5625.
"Apart from crude oil and gas, all minerals, hydro-electric power stations, sea ports, airports, coal power stations, sales or consumption tax like Value Added Tax (VAT) should all be included as resources that should be controlled under derivation principle.
This formula guarantees that a farmer, fisherman, hunter, etc, who has been displaced from his land, gets reasonable compensation.
Individuals will police families, families-communities, communities; wards; wards; LGs, LGs; SGs; and SGs; FG."
Wants 50% revenue for Niger Delta
"For resources derived from the Niger Delta Region, 20 per cent should be given to the Niger Delta Region before the 50:50 formula is used to divide between Federal Government and state and local governments including states and local governments in the Niger Delta Region.
This 20 per cent to Niger Delta should begin in 2009, rising by 5 per cent per year from 2010 until 50 per cent is achieved."Within a short term period, militancy/restiveness will be curtailed and sustainable peace in the Niger Delta Region restored.
Federal Governments and state governments from other areas will not receive less than they currently get because the additional volume of crude oil and gas that will now be produced (when militancy/restiveness is reduced and sustainable peace is maintained in the Niger Delta) will more than compensate for what will be due to the Niger Delta.
The overall volume increase in 2009 will be over 25 % and comes from what is currently lost to militancy and restiveness. "Also, note that in the last five years, average annual price increase of crude oil has been more than 20%.
If it continues to grow at more than 10% per year, there will still be more than 5% to be shared by the rest of the country."The projected annual price growth of 10% is estimated to come from un-abating heavy demands by China and India, and some fast developing economies that are currently growing at close to 10%. Besides, total global supplies are growing slower than demand.
All the above pressures are expected to result in price escalation. Green energy from ethanol could moderate demand, but will not harm it as growing food prices will slow down ethanol production.This, it said, has become imperative as the nation could no longer afford the continued disruption of oil production in the country."
Continuing, it said: "The causes and effects of the Niger Delta crisis are too well-known to warrant any further elucidation. But we must remind ourselves that until a just and lasting solution acceptable to Niger Delta in particular, and all stakeholders generally, is found, the problem will remain with us, growing like a malignant cancer."
Between 2006 and 2007, the nation is estimated to have lost a minimum of 500,000 barrels per day at an average price of $60.00 per barrel or $21.9 billion in the two years.
Current production is estimated at 1.90 million barrels versus a budget of 2.45 million barrels per day, giving a loss of 550,000 barrels.
Says $5.005 bn lost in 4 months to militancy
"Valued at US$100 per barrel, first quarter loss this year is US$5.005 billion. The nation cannot afford the continuing sustenance of this loss.
Without solution to the Niger Delta crisis, crude oil supply to the refineries, and dry gas supply to the existing and projected thermal power plants, can not be guaranteed. Can the nation progress without power and energy? No. Added to these are huge material and human losses that have devastated the Niger Delta"
Wants 2009 budget this July
NACCIMA said the fact that the 2008 Budget was signed into law on April 14, 2008, indicating that the timing of the budget is wrong, stating that the President of the USA signed the 2009 Budget into law in January 2008, giving the bureaucrats one year to begin implementation and recommended that the 2009 Budgets should reach the National/State/Local Assemblies in July 2008, giving the Legislators three months to consider and approve same by October.
A neat budget should reach the Executive in November while every ministry, department, and agency should receive their release in December to enable them start implementation on January 1, 2009.
Backs Constitution review
On constitutional review, it told the Federal Government that "a number of issues have been mentioned but a few will be highlighted. It is gratifying that the National Assembly has now set up a 74-member Committee to carry out the review.
Apart from amending the laws that the Independent National Electoral Commission (INEC) interpreted as granting it immunity to disobey court orders, other areas, including representation based on population, should be included. Globally, representation is based on population and Nigeria cannot afford to be in isolation."
It said that Fiscal Federalism should be embraced as "this will restore more power to the states and wean them from the FG. Transferring resources to areas of their derivation will encourage states and local governments to look inwards and strive for development instead of hanging on the FG.
Collection of Value Added Tax (VAT) - a consumption tax- should be transferred to states. We said above that Value Added Tax should be included in resources to be shared according to revenue sharing formula."
Okays FoI Bill
On Freedom of Information (FoI) Bill it stated: "This Bill, which has been in the National Assemblysince 2007, should be speedily passed into law.
It does not only seek to entrench anti-corruption and accountability but also guarantees rights of citizens to know the happenings in governments. "Government at all levels should embrace Fiscal Responsibility Bill as soon as the Freedom of Information Bill is passed into law.
The Bill, when passed into law will restore transparency, accountability and integrity to governance."
Wants 20% limit for excess crude reserve
On the price of crude petroleum oil in Budget:, the body of businessmen in the country said: "The FGN fixed the price of crude petroleum oil at US$53.8 in 2008 Budget, while the National Assemblyraised it to US$59.0 per barrel. Since the middle of February 2008, crude oil has sold at over US$100 per barrel.
Both prices give a positive variance of 85% and 69% above Budget figures, respectively. This huge amount is outside the control of the National Assembly but vested at the discretion of the President and state governors jointly.
The amount has been very tempting to the President as evidenced by the on-going revelations at the probe by the Power Committee of the House of Representatives. About US$16 billion were taken from this excess crude oil account to fund Independent Power Projects while power generation has declined instead of improving.
"We, therefore, recommend that excess crude reserve be limited to 20% positive variance from the budget. Any amount above this should be transferred to a deposit account to be made available for sharing according to the approved formula on the approval of the National Assembly."
Says Nigeria needs 75,000 Mw power
On power generation and distribution, it said: "The on-going investigation by the House Committee on Power Generation and Distribution has exposed the abysmal depth and decadence into which the Power Sector was plunged.
That Thermal Gas Power Stations could be commissioned with fanfare without connection to gas pipeline is unfortunate. It is estimated that the gas that is currently flared in the Niger Delta, if economically harnessed, could generate over 20,000 megawatts of electricity.
"Experts have said that the US$16 billion taken from the excess crude oil account would have added between 16,000 and 24,000 megawatts to the national grid. "To become a medium world power, the group Nigeria is aspiring to belong in Vision 20:2020, we must generate and distribute a minimum of 500 megawatts per million of the population.
he estimated population of 150 million people in 2009 implies generation of 75,000 megawatts distributed through the national grid. Assuming that we can generate and distribute 10,000 megawatts in 2010, this works out at 67 megawatts per million, just 13.3% of our needs. Power is consequently an urgent priority.
Wants wind, solar energy explored
"We, therefore, recommend that our power generation, transmission and distribution plants be made most attractive to the OPS investors and diversified from Gas Thermal to Coal Thermal and Hydro-Power, instead of putting all eggs in one 'basket'.
Solar and wind power generation should be developed and encouraged for rural areas which are expensive to reach through the national grid. States, local governments and communities should work with the OPS to achieve excellent result
."It is unfortunate that with 50 years experience in the crude petroleum, oil and gas industry, Nigeria still flares gas that can provide over 20,000 megawatts of electricity per day, almost seven times higher than current total production.
This flaring has caused heavy environmental pollution and degradation and contributes to global warning."
Hails Yar'Adua on Police pay
On Security, it said; "The FG under the leadership of President Umaru Musa Yar'Adua, should be congratulated for upgrading the remuneration package of the Nigeria Police Force.
It is hoped that the improvement, which should be extended to other members of the Security Forces, will motivate them to perform better and shun bribery and corruption. We recommend Community Policing in addition to whatever past Police Reform Commissions offers the nation. The hopeless condition of our security is driving away Foreign Direct Investments (FDIs) and increasing poverty.
The Niger Delta deserves special attention, not militarisation by the FG or indigenes."