Economic Confidential, April 2008

Power Scam: Facts on Withdrawal from Excess Crude Account 2005-2007

By Labaran Saleh

In a Memorandum dated 15^th June 2006 submitted the same day by the Revenue Mobilisation Allocation and Fiscal Commission on Alleged Withdrawals of Funds from the Federation Account, the Chairman of the Commission, Engr. Hamman Tukur informed the Joint Senate Committees of Appropriation and Finance investigating the Withdrawals of Funds from the Federation Account that the Excess Revenue Account, from which all the withdrawals have been effected, is made up of: Federation Export  Crude, Oil, Excess PPT, Excess Royalty which are in dollars while there also exists, another account for excess revenue known as the Excess Domestic Crude Account for amounts over and above the budgeted benchmark for crude oil allocated to the Nigerian National Petroleum Corporation for domestic consumption.

In a document exclusively obtained by the Economic Confidential magazine, it has been discovered that since 2003, the Federal Government has been maintaining these accounts.  The reasons may be that the Federation is saving for a rainy day or that the Federal Government wishes to ensure macroeconomic stability by controlling money supply, mopping up excess liquidity as well as building protective mechanisms against inflation and fluctuations in oil prices.

On the withdrawal from the Excess Revenue Account, the Commission submitted that Section 162(3) of the 1999 Constitution of the Federal Republic of Nigeria provides that only the Federal, States and Local Government Councils shall directly benefit from the Federation Account which was reinforced by the Supreme Court judgment in the case of Attorney-General of the Federation Vs Attorney-General of Abia & 35 others (N0. 2) (2002) 6, NWLR, Part 764.  In spite of this Constitutional provision, there were arbitrary withdrawals to fund some projects withdrawals from the Federation Account, particularly the Excess Revenue Account.

While the Commission said it was deeply concerned by the epileptic nature of energy supply, which invariably, is the fulcrum of our desired economic development, however, it observed that: “deductions have continued unabated from the Federation Account in the name of developing power in the Niger-Delta which should have been from the Federal Government of Nigeria’s budget. If these withdrawals are advance payments, it is hoped that each is supported by a due process bank bond guarantee.  There is no time limit for the deductions considering the speed at which some of the deductions were made. The terms and conditions of the “loans” have also remained unclear.

“The amounts are said to be loans as consented to by the stakeholders, but the Federation Account Allocation Committee, has not received any formal document indicating that the stakeholders have agreed to give out loans from the Excess Revenue Accounts. Obviously, a Governor of a State has no legal right to commit the funds of his State without the express approval or appropriation by his Assembly. Is ALGON an authority to agree/approve committing Local Governments’ funds as loan of any description?

“Why is it that there is change of name from Niger-Delta Power Holding Company to National Integrated Power Project? It may be necessary to find out who is actually being paid these huge deductions from the Federation Account.”

As at that period and records from FAAC files show that the sum of $1,045,259,903.23 was drawn from either the Excess Crude Fund or from the Excess PPT Revenue Fund for financing the power projects under three different titles, as follows:

Niger Delta Power Holding Comp. Plants (NDPHCP)

From Excess Crude Account

             Date          Description                                           Amount

          04/10/05       Funding of NDPHCP 1^st payment               $ 98,359,656.76

          01/12/05       Funding of NDPHCP 2^nd payment               $ 77,802,405.75

          21/12/05       Funding of NDPHCP                                $      664,271.18

          29/12/05       Funding of NDPHCP                                $      609,145.25

                                                          Subtotal                  $177, 435, 478.94

(b)      NNPC Joint Venture Operation Gas for NNDC Plants

              Date         Description                                                 Amount

          28/12/05       NNPC JVO – Gas                                    $213,230,000.00

(c)      National Integrated Power Project (NIPP)

          (i)       From Excess Crude Oil Account:

                   Date             Description                                           Amount

                   01/02/06       Funding of NIPP                           $   1,934,586.98

                   06/03/06       Funding of NIPP                           $209,502,464.45

                   29/03/06       Funding of NIPP                           $ 87,559,556.44

                   05/04/06       Funding of NIPP                           $      138,023.88

                   20/04/06       Funding of NIPP                           $   2,778,144.55

                                      Subtotal                                    $301, 912, 776. 30

(ii)      From Excess PPT Account:

                       Date         Description                                           Amount

                   23/04/06       Funding of NIPP                           $ 46,634,800.37

                   05/05/06       Funding of NIPP                           $      453,800.37

                   05/05/06       Funding of NIPP                           $   2,200,854.99

                   05/05/06       Funding of NIPP                           $      209,225.12

                   05/05/06       Funding of NIPP                           $300,736,493.00

                   17/05/06       Funding of NIPP                           $   2,095,024.64

                   17/05/06       Funding of NIPP                           $      351,449.50

                                                   Subtotal                       $352, 681, 647. 99

Grand Total                                                              $1, 045, 259, 903.23

How Deduction Continued Unabated to the End of OBJ Tenure

While the administration of President Olusegun Obasanjo refused to heed the warning, Economic Confidential can authoritatively reveal that the government continued to make further illegal deductions from the Excess Crude Account till June 2007, a month after handing over to President Umaru Musa Yar’Adua to the tune of $3.9bn. In the updated table of the deduction submitted to public hearing of the House of Representatives’ Committee on Power and Steel, the figures from deductions from excess crude account has risen from $1bn in 2006 to over $3.97billon as detailed below:

Deductions for the National Integrated Power Projects (NIPP) from

the Excess Crude, PPT/Royalty Accounts