By CHARLES KUMOLU
SENATOR Nkechi Nwaogu is the Senate Committee Chairman on Gas. In this interview, she frowns at the budget cycle in Nigeria, adding that it is responsible for the frequent budget face-off between the executive and the legislature. Nwoagu also wants an agreement that would allow the National Assembly to make inputs into the budgets.
As a financial expert, let’s look at the budget impasse between the National Assembly and the executive. What is really the problem?
Even though I am a member of the Senate Committee on Appropriation, I will say that it is still hazy. I did follow the executive’s submission, which is an estimate. They complained about tampering with the budget. But I do not know at what point. It revolves around that the personnel sub-heads were tampered with, and that such should not have been done. But to what extent were they tampered with? The main problem with the budget of 2013, just like it has always been in the last ten years that I had been in the National Assembly, has been the same tampering matter.
The expectations from us as legislators, apart from our primary function of providing quality legislation and undertaking oversight to ensure that things are done well, include providing secondary responsibility, that is, providing constituency function to improve the quality of life of our people. Some of these basic things have never been taken care of either by the federal budget, or that of the state government or the local government budget. We cannot just sit in Abuja, the entire 459 representatives, to make laws when, in our villages and communities, there are no health centres, electricity, potable water, and other basic amenities. The state and federal governments do not capture these things in their budgets.
Senator Nkechi Nwaogu
Can’t legislators bring up new sub-heads? Must you tamper with those ones that the executive brings?
We do bring. But where will the money to fund them come from? The executive estimate comes in fixed amounts. There are no provisions for inputs from the National Assembly. I suggest that the legislature and the executive need to work together. At what point do we bring this harmonious relationship as it affects budget? This is July.
The executive arm should ask the legislature to send their proposals as expressed by their constituencies. I have six local government areas. I am the only one that knows their needs, not the minister in Abuja knows these needs. Not even Mr President knows. We are elected by the people to provide quality life for them. We need to work together. There should be no friction.
We must be made to make submissions according to the templates to be provided by the executive. This is how it should be instead of them putting their own ahead. Every year, you see overseas’ training, local training and many more; there are always a lot of ambiguous, unexplainable budget heads where they filter
the funds away. That is why we are consuming 72% on overhead.
This overhead can be brought down to 60%. The truth is that the legislators do not have the resources to carry out thorough oversight function, which means investigative oversight function. Oversights should not just end in looking at projects on-going or completed, but also the overhead of ministries and agencies. You cannot tell me that every year, there must be purchase of computers and maintenance with millions consumed.
The legislature has no means of identifying the genuineness of these purchases. We can reduce our overhead. Mind you, all the areas where the National Assembly made inputs are capital projects that will bring development, not overhead. There are many leakages in revenue. That is the reason for the problem; and the problem can be resolved if both arms of government are truthful.
How do you think the recurring budget face-off can be addressed, in order to achieve a comfortable level of budget implementation?
Let us see what they have done so far. We are now in July, seven months into the year. What have they achieved with the budget? The system of budgeting is wrong. We should change our budget cycle. It should not be January to December because of the kind of seasons that we have. The budget is usually passed by December/January. It takes another three to four months to have the budget breakdown analysis.
By the time they begin to award those capital projects, it will be rainy season. You can’t do much during the season in terms of road infrastructure. It is better to do our budget in September. Let the executive give us budget submission by September. Let the National Assembly ensure that the budget is passed according to all its ramifications by December. Then, by the first week of January, contracts must begin to go out to contractors.
Secondly, the level of corruption in the civil service is beyond comprehension. Most of the civil servants are involved in this contract work. For instance, on constituency projects are mind-boggling that ordinary Nigerians think that we in the National Assembly are the providers of the contractors. It is not true. The constituency projects are never completed, that is why most of the uncompleted projects in Nigeria are the National Assembly projects.
Has anybody found out what has happened to the funds voted for them? It is because these jobs are hijacked by civil servants of ministries and agencies. They sell them second hand, and the next person sells it third hand. By the time the actual person goes to do the project, he finds that he is working on the skin. The street lights that were done in my house did not last for one month before they collapsed.
I do not know who to call. I know that somebody has been paid. The way forward is to go back to the drawing table. We must agree; the executive must agree with the leadership of the National Assembly. The National Assembly should make submissions of our projects interest as expressed by our constituencies to the executive so that they are captured by the ministries and agencies.
This is against the current trend where the executive brings it to us to make additions and they call it distortions. Mind you, the constitution says the president will lay before us a budget estimate. We can amend the constitution if the executive does not need to bring the budget to us. That will be okay. But if the constitution says that the president should lay before us the budget estimate, an estimate is an estimate.
It is plus or minus. It is a draft. The way forward is for an agreement with the National Assembly to make inputs into the budgets which will be factored by the ministries and parastatals. The oversight activities of the National Assembly must be more proactive. There should be more funds made available so that we can do the job thoroughly and at the right time. I am happy to announce that there is a bill being worked on which is the National Assembly Budget Office. It will be the shadow Budget Office of the executive. It will continually x-ray the activities of the executive from the first day the budget is passed.
Most of the constituency projects NASS members asked for are supposed to ordinarily be the responsibilities of the local governments…
They could be the functions of local governments or the states. But they are absolutely not provided for at all, or not provided for adequately.
The worry is that the executive arm brings out what it wants to do, and suddenly the legislators tamper with it. For instance, the executive may earmarked N6b for the reconstruction of Lagos-Ore Road; then the lawmakers might decide to reduce it to N2bn, without due consideration for some costing factors?
It is. In the case of the Lagos-Ore Road, which you mentioned, what happens to a community in Ore or Lagos where the project passes? How many of those rural dwellers use the road? They are very important. I support the construction and rehabilitation of federal roads. But the case is: how do we take care of over ninety percent of ordinary Nigerians who do not have anything to do with the Lagos-Ore Road? Our people need health centres, primary schools, rural electrification, and boreholes.
Can we know about the activities of the Senate Committee on Gas in terms of oversight function?
As the chairman of the Senate Committee on Gas, I must thank the leadership of the Senate for having confidence in me in giving me that position. When we came on board in September 2011, the gas sector was almost being consumed by oil. When people hear about oil and gas, they only talk about oil; whereas evidence abounds that Nigeria has more gas than oil. We have over one hundred and eighty-six trillion cubic of gas that is expected to provide about thirty-six trillion US dollars.
The crude oil reserve as we have it today is about forty billion barrels expected to provide only about 3.6 trillion dollars. So, if we are to channel resources in exploration and exploitation of oil only, we drain all our oil very soon. If we channel the same resources to the exploration of gas, we are going to get thirty-six trillion US dollars. You can see that if we put enough resources in gas exploration, we will have ten times more revenue than what we are getting from oil.
Why is it that the efforts of the Federal Government are directed at oil alone?
It is probably because of the cost of the exploration and exploitation of gas. Right now in the committee on gas, we have only realised that what is being sold in the gas market is gas obtained in association with oil, which is called associated gas. Our committee is working with the Nigerian National Petroleum Corporation and the Ministry of Petroleum Resources on the current Petroleum Industry Bill.
It is expected that this law, when passed, will open up the gas sector. That is why I am a crusader for the early passage of the PIB. It will open up the gas sector for new investors, both national and international. Our committee is also frowning at the consistent flaring of gas which ought to be monetised, and penalties ought to be paid by those who default.
In the budget of 2013, there is some reasonable amount that the Ministry of Petroleum Resources has earmarked for what they call gas reconciliation exercise. This means that government does realise that the revenue derivable from gas has not been maximally obtained. If we maximise the revenue accruable from gas, we will improve on the total revenue of Nigeria. For instance, in 2013, the total revenue available for distribution is N10. 48 trillion.
We believe that it is grossly understated. This means that there must be a lot of leakages. Gas has not made its expected contributions to the nation’s revenue. Our committee is working towards the early passage of the PIB so that we can put stiffer penalties for those companies who consistently flare our gas. We know that they do not do such in their own countries. Our committee has done a lot of foreign oversight. We visited the gas plant in Escravos that is being operated by Chevron.
We discovered that we have the same type of plant in Qatar. The gas-to-liquid plant in Qatar started the same day in construction as the one in Nigeria at the Delta. The one in Qatar has been in operation for two years, but Nigeria’s own has not been concluded to commence operations on commercial scale. The committee feels that the gas sector needs a lot of exposure.
It needs a lot more attention. In the past, we had a minister of state, gas. We are advocating for the same thing now so that more concerted efforts will be dedicated towards the development of the gas sector, which is subsumed by the oil sector. It should not be so. If you look at the domestic gas development in Nigeria, less than five percent of homes in Nigeria do not have much to do with LPG or other domestic gas.
How many of our industries are being served with industrial gas that could reduce their cost of production to make them more competitive? We really need to put more emphasis on gas exploration, gas processing, and gas distribution. We just came back from the Exporting Gas Countries’ Forum in Moscow. In Moscow, ninety percent of all power utilisation comes from gas. Why can’t Nigeria replicate the same since we have much gas available?
What do we need to do to ensure that Nigeria’s gas is channelled towards the domestic end of the market?
What we need is infrastructure, which is not readily available. The cost of building gas pipelines is prohibitive. But there are many other processes in tackling this. We can open up the industry, and allow investors to run them with commensurate concessions so that they will find investment in gas development attractive. For instance, gas pricing in Nigeria is a disincentive to go into gas production. You cannot compel an investor who has put in so much money to harness gas from the point of production to maybe the point of distribution to sell his gas at one dollar per DTO. We need to revisit the gas pricing system in Nigeria to attract investors.
Has your committee made this official to the executive arm?
We have, but because we have the Petroleum Industry Bill standing, it is hoped that all these problems and solutions are captured in the PIB. That is why we have not been able to make a separate submission. We are relying on the PIB. As we x-ray it through public hearing coming in July, we shall gather other people’s opinions. Also the Nigeria Gas Association will have its bi-annual conference, where the document of the PIB will be a major paper to be discussed.
It is not only the PIB; it also includes the subject of gas and its domestic development. Look at our agreement on the West African Pipeline; we are supposed to supply to the West African countries, like Ghana and Togo, about 130 million cubic of gas. We are not meeting the supply; hence most of these states in the West African region are also having their economies seriously hampered by the erratic supply of our gas. With this gas, we have the demand and there is the consumption. Why don’t we look at the exploration and production sector and see how we can bring people in to invest in exploration, processing and distribution? If we do that, even the domestic consumption alone will boost Nigeria’s revenue.
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