FIRS: Policy may worsen economic woesNNPC: It will create investments, jobsTHOUGH the Federal Inland Revenue Service (FIRS) and the Nigerian National Petroleum Corporation (NNPC) agree on the need to generate revenues for the nation, they have apparently differed on the planned deregulation of the downstream sector of the oil and gas industry.While the FIRS fears that the removal of subsidy on petroleum products may aggravate the nation's economic woes, the NNPC is hopeful that the policy willincrease investments and job opportunities across all sectors of the economy.This is coming on the heels of a disclosure by the Comptroller-General of Customs, Alhaji Abdullahi Dikko Inde, that the country lost N50.304 billion between January and September this year due to concessions and exemptions.Also at the weekend, the Office of the Auditor'General for the Federation said that it did not at any time allege that the NNPC did not submit audited accounts to its office. It said that the report submitted to the Public Accounts Committee of the House of Representatives on October 14, 2011 concerning the status of the audited accounts, showed that the NNPC submitted its audited accounts up to 2010.The Executive Chairman of FIRS, Mrs. Ifueko Omoigui-Okauru, who spoke at an interactive session with the House of Representatives Committee on Appropriation at the weekend said the security situation in the country which had remained volatile may likely affect foreign direct investment, industrial capacity expansion and general economic and social wellbeing.Presenting the FIRS revenue generation projection for 2012, to the John Enoh-led House Committee, the executive chairman stated: 'The planned removal of oil subsidy by the Federal Government is likely to affect domestic cost of production of goods and services with negative impact on employment and incomes.'On the other hand, the government's declared intention to invest the money to be realized from removal of oil subsidy in infrastructure, health and education is expected to drive business in those areas with positive effects on tax revenue.'She said that the Petroleum Industry Bill when passed would stabilise the Nigerian oil sector and provide tremendous benefits to Nigerians in the oil business, adding that 'there will be improvement of incomes with salutary effects on the tax administration and the economy as well.'The executive chairman also hailed the lifting of ban on some import items and the recently introduced port reforms saying that this would encourage trade.On the recent increase in the minimum wage for workers, Omoigui-Okauru said that the development 'will increase the purchasing power of the workers, thereby enhancing revenue earnings through VAT and personal income tax.'According to her, 'the nationalisation and recapitalisation of three banks and conclusion of mergers by others should provide stability in the banking sector and thus glow in the economy,' adding that the recent increase in the monetary policy rate from 9.25 per cent to 12 per cent and increase in the cash reserve requirement from four per cent to eight per cent dampened consumption.The FIRS chairman also noted that the recent depreciation in the value of the naira was likely to have a limiting effect on imports and thus a reduction in import VAT, stressing that 'a reduction in volume might be off-set by increase in prices of goods occasioned by depreciation.'The Comptroller-General of Customs who also presented the 2012-2915 revenue projection of the Nigerian Customs Service (NCS) explained that N21 billion was lost to exemptions and waivers, N1.538 billion due to ECOWAS Trade Liberalization Scheme (ETIS) while N26 billion was lost to Negotiable Duty Credit Certificate (NDCC).Earlier, Chairman of the Committee, Enoh, warned that the committee would not treat lightly agencies that do not remit their internally generated revenue (IGR) into the federation account as required by law, even as he warned chief executives of defaulting agencies.Enoh stressed that the committee was concerned about the poor implementation of budgets by agencies, warning that selective implementation of appropriation acts would not be accepted.The Group General Manager, Group Public Affairs Division of the NNPC, Dr. Levi Ajuonuma, said at the weekend that the planned removal of fuel subsidy on premium motor spirit (PMS), also known as petrol would enable government to plough back the huge yearly subsidy spent on provision of some basic infrastructure as well as facilitate the entry of private investments in refineries, petrochemicals and allied products.'As a people we must learn to open our eyes to current realities and embrace the opportunities that a deregulated downstream sector of the oil industry has on offer for us all. Removal of subsidy means that government would have more funds to channel into the provision of some identified vital infrastructure and social welfare packages for some vulnerable groups like pregnant women, children as well as unemployed youths. All these are captured in the post-deregulation Social Safety Net scheme,'' Ajuonuma stated.Hesaid special community public work programme with competitive reward package was being designed to help keep youths especially in non-urban areas engaged and help them resist the lure of the rural-urban migration.He also said that a deregulated downstream sector would naturally encourage more private participation and investments, which would translate to job creation and employment opportunities for more Nigerian youths.'It is common knowledge that about 10 years ago, government gave licences to some private investors to build refineries and one decade after none of them has come on stream. The reason for this is very simple: No investor would enter a market where government prescribes how much the products should be sold; in fact, such a venture is not even bankable. But under a deregulated and liberalised regime, as we have seen in the telecoms, aviation and even media businesses, private initiatives and ventures help to stimulate the much needed competition and growth,' Ajuonuma argued.He said the trend all over the world is that government no longer subsidises consumption butrather subsidises the production sector in order to boost production in the economy.He said that deregulation of the downstream sector of the petroleum industry would encourage private investors to build more refineries in the country to complementthe four existing government-owned refineries alongside the three planned Greenfield refineries to be built by the NNPC in conjunction with some Chinese investors, whichareenvisaged to come on stream in few years.'It is our hope that in afew years from now, Nigeria would transform from a mere exporter of crude oil to a major exporter of petroleum products like petrol, kerosene, diesel and even white products like lubricants. We must use the entire oil and gas industry value chain to employ and empower our teeming youths,' he said.The NNPC spokesman noted that what was different this time around was that under 'President Goodluck Jonathan we have a government that is determined to ensure that fuel subsidy savingsare managed and monitored by a group of eminent Nigerians who would track, measure and monitor the projects and guarantee that contracts for the construction of roads, hospitals and other infrastructure are awarded to companies with track records of performance and service delivery.'He called on the Nigeria Labour Congress (NLC), the Trade Union Congress (TUC) and all other bodies opposed to the removal of subsidy to give government the benefit of implementing the deregulation programme and monitor how the proceeds would be used for the benefit of the Nigerian people.A statement by Hyacinth Obilor on behalf of Office of the Auditor-General of the Federation noted: 'The claim by the EFCC that they are not required by law to submit their Audited Accounts to this Office is inconsistent with the provision of Section 85 subsection 3 (b) of the 1999 Nigerian Constitution as amended which stipulates that:'The Auditor-General shall comment on the annual accounts and auditors' reports thereon of all government statutory corporations, commissions, authorities, agencies, including all persons and bodies established by an Act of the National Assembly.'Section 37 of the EFCC Act, 2004 as amended which the Commission is relying on in its publication deals with issues of report of its activities to the National Assembly. This does not preclude the Commission from submitting its audited accounts to the Auditor-General for his comments as provided in the 1999 Nigerian Constitution as amended. This statutory requirement is intended to enhance the internal control on the external auditors who audit these accounts, as well as to ensure public accountability and probity in the management of public funds''Similarly, and in order to enhance transparency, probity and accountability in all government financial transactions, the Office of the Auditor-General is appealing to all stakeholders to submit their audited accounts on time and to approach the office for verifications of facts and figures or clarification on any issues when in doubt.
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