President Goodluck Jonathan
President Goodluck Jonathan and the National Assembly appear to be back in the trenches over the appropriate oil benchmark for the 2014 budget. The disagreement could stall the passage of the budget, write Muhammad Bello, Shola Oyeyipo and Ojo M. Maduekwe
The plenary in the House of Representatives last week was different. It appears the style of the Speaker, Hon. Aminu Waziri Tambuwal that whenever it seems deliberations will generate heated debate he would switch off his microphone and listen to his colleagues, either individually or as a group. That day, barely 48 hours after the scheduled visit of President Goodluck Jonathan to present the 2014 budget to a joint session of the National Assembly was put off, the lawmakers were busy deliberating on matters before them.
Suddenly, there was a frenzy of activity around the Speaker. First, the legislators sought Tambuwal’s attention one by one, after which all the principal officers clustered round him for consultation. The atmosphere in the chamber remained calm. There was no sign that an upset was in the offing. The consultation went on - back and forth - until the gallery was empty and the House went into a closed-door session. Nobody knew what the agenda was until the gallery was re-admitted and the bombshell dropped. The House had just jacked up the benchmark for crude oil to $79 per barrel.
A joint Senate/House committee had pegged the benchmark at $76.5 per barrel, $2.5 above what was the executive had fixed in the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
THISDAY investigations revealed that before the benchmark debacle, the executive had sought the approval of the National Assembly for the passage of the MTEF/FSP. Based on the understanding with the lawmakers, the executive did not envisage another face-off with the legislature over the oil benchmark as it happened last year.
It was aware of the exchanges it had with the legislators on the issue of constituency projects and others, which dogged the presentation and eventual passing of the 2013 budget. But its efforts did not save the executive from being on a collision course with the lawmakers.
It was aware of the exchanges it had with the legislators on the issue of constituency projects and others, which dogged the presentation and eventual passing of the 2013 budget. But its efforts did not save the executive from being on a collision course with the lawmakers.
Sharply divided over the decision of adopting the benchmark, the conclave of the House emerged after hours of meeting to vote on what oil benchmark to adopt with 79 members supporting the $79 idea while 62 opposed the idea.
The lawmakers also adopted the exchange rate of N160 to a dollar for the next three years. In addition, they called on the federal government to curb oil theft and diversify the economy.
The lawmakers also adopted the exchange rate of N160 to a dollar for the next three years. In addition, they called on the federal government to curb oil theft and diversify the economy.
Perhaps, having done its home work meticulously, the House Committee on Finance, which projected the successive volume of crude oil production as 2,3883, 2,5007, and 2,5497 million barrels per day for 2014, 2015 and 2016 respectively while at the same time putting the corporate tax and VAT at 30 percent and 5 percent respectively, laid its report.
"The government should strengthen and consolidate its fiscal strategy to narrow the gap between projected and actual revenue for the period 2014-2016 by curtailing oil theft and diversifying the economy to increase tax bases so as to increase tax revenue," the lawmakers said.
"The government should strengthen and consolidate its fiscal strategy to narrow the gap between projected and actual revenue for the period 2014-2016 by curtailing oil theft and diversifying the economy to increase tax bases so as to increase tax revenue," the lawmakers said.
At the same time, they requested that "the details of the SURE-P projects to be executed be attached as an addendum to the annual budget estimates for approval by the National Assembly," just as they advised the executive to distribute N666 billion from the Excess Crude Account (ECA) among the three tiers of government as proposed by the executive.
Alleged Mismanagement of the ECA
A couple of days after the House’s resolution on the MTEF/FSP, the Rivers State Governor, Chibuike Rotimi Amaechi, had alleged that $5 billion was missing from the ECA. Amaechi, incidentally, spoke in Sokoto, where he chaired the meeting of the Nigeria Governors' Forum (NGF) and later met with his colleagues as well as the speaker behind closed doors inside Government House, Sokoto.
A couple of days after the House’s resolution on the MTEF/FSP, the Rivers State Governor, Chibuike Rotimi Amaechi, had alleged that $5 billion was missing from the ECA. Amaechi, incidentally, spoke in Sokoto, where he chaired the meeting of the Nigeria Governors' Forum (NGF) and later met with his colleagues as well as the speaker behind closed doors inside Government House, Sokoto.
According to Amaechi, “That account, (the ECA) belongs to the federal, states and local governments. Today, it is $4 billion. We don’t know who took $5 billion.”
The revelation, of course, sparked off a row between the governor and the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, who fired back and described Amaechi as a liar, whose state, like others, partook in the sharing of the money he claimed was missing. Ironically, the debate over the propriety of handling the ECA has its root in a popular contention inside the House where it was described as an illegal account forced on the nation by erstwhile President Olusegun Obasanjo.
This drama had hardly begun when the executive started to have a rethink about the president’s presentation of the 2014 budget to the legislature. The exercise had been deferred, for no definite reason for about one week then. This time around, the fissure that began as an inexplicable event turned out to be a full-blown political schism with its origin in another remote event.
Prelude to the Showdown
A history of the current showdown between the presidency and House can be traced back to November 6, 2013, when a House member, Hon. Aliyu Madaki (PDP Kano), with regards to a circular that hinted November 12 as the date for budget presentation, raised a motion that sought an explanation as to the intention of the president to come with a fresh budget when that of 2013 was below 80 per cent performance.
A history of the current showdown between the presidency and House can be traced back to November 6, 2013, when a House member, Hon. Aliyu Madaki (PDP Kano), with regards to a circular that hinted November 12 as the date for budget presentation, raised a motion that sought an explanation as to the intention of the president to come with a fresh budget when that of 2013 was below 80 per cent performance.
Madaki, in his motion seconded by Hon. Mohammed Ibrahim Idris (PDP Kogi), said: “We must not turn the budget into an annual ritual where the president comes and we make a ceremony and then the budget is never implemented. Let’s shift this budget presentation until we are convinced that this year’s budget is implemented at least 80 percent. We are not asking for 100 percent.”
The Plan to Heckle Jonathan
Long before the budget row, Governor Rabiu Musa Kwankwaso of Kano State, along with some of his colleagues in the G7 had visited the House of Representatives to interact with the lawmakers on the issue of the defection of about 60 of them, together with the G7 to the splinter group in the Peoples Democratic Party (PDP). Without warning, a section of the legislators started booing the delegation.
Long before the budget row, Governor Rabiu Musa Kwankwaso of Kano State, along with some of his colleagues in the G7 had visited the House of Representatives to interact with the lawmakers on the issue of the defection of about 60 of them, together with the G7 to the splinter group in the Peoples Democratic Party (PDP). Without warning, a section of the legislators started booing the delegation.
This incident, which infuriated some legislators, later reared its ugly head when the matter of Jonathan’s budget presentation re-surfaced last week. THISDAY learnt from a source that one of the Kano lawmakers vowed that since his governor, Rabiu Kwankwaso, who was part of the delegation was subjected to humiliation, he would also avenge by heckling the president.
The lawmaker was not alone. He had many supporters among his colleagues from the G7 states and beyond. Of course, the presidency got wind of this well in advance. It decided not to dignify the vengeful lawmakers. Instead, it picked on the sore matter of lack of harmony in the National Assembly on the crude oil benchmark.
A Plethora of Caucus Meetings
Both the executive and the legislative arms of government had series of meetings to consider their options on the matter. While the presidency was considering drafting the president’s letter of not appearing at the House, the lawmakers have been meeting to consider their options.
Both the executive and the legislative arms of government had series of meetings to consider their options on the matter. While the presidency was considering drafting the president’s letter of not appearing at the House, the lawmakers have been meeting to consider their options.
The House leadership insisted that it won’t budge on the benchmark for crude oil.
For no clear reasons, the pro-Jonathan gladiators in the House held back their planned attack on the integrity of the House leaders, despite the fact that it was obvious that the latter would not shift its ground. All the meetings failed to resolve the problem, prompting the president to defer the presentation of the budget. This was conveyed to the House via a letter.
For no clear reasons, the pro-Jonathan gladiators in the House held back their planned attack on the integrity of the House leaders, despite the fact that it was obvious that the latter would not shift its ground. All the meetings failed to resolve the problem, prompting the president to defer the presentation of the budget. This was conveyed to the House via a letter.
Jonathan’s Letter
On the eve of his Tuesday parley with the House, words got out that the president would not turn up. This was on the evening of Monday, hours after the junior staff of the National Assembly had been instructed to stay off the premises until after 2 pm, when it was expected that the president might have come and gone.
On the eve of his Tuesday parley with the House, words got out that the president would not turn up. This was on the evening of Monday, hours after the junior staff of the National Assembly had been instructed to stay off the premises until after 2 pm, when it was expected that the president might have come and gone.
This was not to be. THISDAY had exclusively reported that the president would not show up. It referred to a letter that Tambuwal, later in the day (Tuesday), read out to the House. The letter read in part: “Please recall that I had written requesting the Honorable House of Representatives to grant me the slot of 12 noon on Tuesday 19th November 2013 to enable me address a joint session of the National Assembly on the 2014 budget.”
The letter which suggests the impasse may be further prolonged as no new date for the presentation was sought by the president however stated that: “It is infeasible for me to present the budget in the absence of a
harmonised position on the MTEF.”
harmonised position on the MTEF.”
“Whereas the Distinguished Senate has approved the Medium Term Expenditure Framework (MTEF) based on a benchmark of $76.5 per barrel, the honourable House of Representatives, has used a benchmark of $79 per barrel.
“In the circumstance, it has become necessary to defer the presentation of the 2014 Budget to a Joint Session of the National Assembly until such a time when both respected chambers would have harmonised their positions on the MTEF. It is my hope that this will be in the shortest possible time. Please accept, Honourable Speaker, the assurances of my highest consideration and esteem,” concluded the letter.
“In the circumstance, it has become necessary to defer the presentation of the 2014 Budget to a Joint Session of the National Assembly until such a time when both respected chambers would have harmonised their positions on the MTEF. It is my hope that this will be in the shortest possible time. Please accept, Honourable Speaker, the assurances of my highest consideration and esteem,” concluded the letter.
Special Adviser to the president on Media and Publicity, Reuben Abati, defended the deferment of the budget presentation session, saying the executive government was being cautious to avoid past mistakes. “Previous acrimonies were blamed on failure of inter-governmental relationship.
“The budget has been ready for over a week now, but since the two arms of the National Assembly are yet to harmonise their positions on the crude oil benchmark in the Medium Term Expenditure Framework (MTEF) and the fiscal strategy paper (FSP), it was wise for Mr. President to wait until this is done,” adding that the presidency would “cause the budget to be laid before the National Assembly as soon as the harmonisation is concluded”.
“The budget has been ready for over a week now, but since the two arms of the National Assembly are yet to harmonise their positions on the crude oil benchmark in the Medium Term Expenditure Framework (MTEF) and the fiscal strategy paper (FSP), it was wise for Mr. President to wait until this is done,” adding that the presidency would “cause the budget to be laid before the National Assembly as soon as the harmonisation is concluded”.
Instantly, this drew the ire of the legislators who debated it vigorously. Hon. Adams Jagaba, indicated that the House was not in tandem with the position of the executive. He cited the non-implementation of 2013 budget by the executive as one problem and according to him, the executive has failed in its implementation of the budget by its inability to execute major capital projects.
In a chat with the Hausa Service of the BBC Tuesday morning, Jagaba said of the entire capital projects for which appropriation was made in the 2013 budget, only 30-35 percent done.
“We will look at the budget thoroughly. We are ready with our blades to tear it apart. We will scrutinise it and oppose any element of it that is anti-people,” Jagaba said, indicating that majority of Nigerians did not benefit from the previous budget.
Indeed, the viewpoint of the lawmakers on the matter was so strong that it was articulated in a submission made by the House Minority Leader, Femi Gbajabiamila.
Indeed, the viewpoint of the lawmakers on the matter was so strong that it was articulated in a submission made by the House Minority Leader, Femi Gbajabiamila.
Gbajabiamila’s Intervention
The lawmaker, who has an outstanding reputation of battling the executive in the past, summarised the House’s take on the matter in a piece he wrote and circulated that day. In the piece, he argued the reasons the House felt that the oil benchmark recommended by the Senate/House joint committee and the executive was not a fair deal for the Nigerian masses.
The lawmaker, who has an outstanding reputation of battling the executive in the past, summarised the House’s take on the matter in a piece he wrote and circulated that day. In the piece, he argued the reasons the House felt that the oil benchmark recommended by the Senate/House joint committee and the executive was not a fair deal for the Nigerian masses.
According to the lawmaker from Surulere in Lagos, there is a fundamental difference between the MTEF/FSP and the 2014 budget. The latter, he stated is an annual fiscal document, while the former is a rolling plan spanning three years. Thus, it will be improper to attribute the same fiscal status to the two for all practical economic purposes.
“The MTEF/FSP is conceptualised to be the basis for the budget for the next three years and unless there is a major and compelling reason for a change in the assumptions and projections in any given year, there cannot and should not be any material change to the MTEF especially within its first year.
“Indeed Section 16(2) of the Fiscal Responsibility Act states that any adjustment to Medium Term Expenditure Framework shall be limited to:
a) The correction of manifest error; and b) Changes in the fiscal indicators, which in the opinion of the president are significant’.”
“Indeed Section 16(2) of the Fiscal Responsibility Act states that any adjustment to Medium Term Expenditure Framework shall be limited to:
a) The correction of manifest error; and b) Changes in the fiscal indicators, which in the opinion of the president are significant’.”
Pointing out that a similar issue had pitted the House against the executive last year, Gbajabiamila noted: “The parameters and assumptions for last year’s $79 have not changed with the price of oil maintained at over $100 per barrel. As a matter of fact, the overall oil and non-oil revenue projections were met and surpassed in spite of the crude theft claimed by government.
“For us, therefore, to suddenly change the benchmark from $79 to $74 or $76.50 as proposed by the executive and the Senate respectively seems whimsical at best. What then was the point of a MTEF based on a three-year rolling plan? We might as well scrap the MTEF and just continue with our annual budgeting proposals or change its name to Annual or Twelve-month Expenditure Framework.
“To accept to drop last year’s benchmark by about 4 or 5 dollars when nothing has changed may also suggest that a House that fought and argued passionately for a higher benchmark just a few months ago was unserious, did not understand the issues, and lacked the courage of its conviction.
“It could also suggest underhand dealings as is often the accusation levelled against the National Assembly,” he said, while drawing attention to the illegality of the existence of the ECA. Days later, the Senate appointed Senator Ahmed Mohammed Makarfi from Kaduna to harmonise the conflicting positions on the benchmark between both houses.
Enters the Harmonisation Committee
The former governor of Kaduna State, Ahmed Makarfi, was given the task of resolving the budget crisis. He was named as the leader of the harmonisation committee on benchmark problem by the Senate. But before his committee could kick off, there were indications that his colleagues, who do not want to openly antagonise the executive, had in private supported their counterparts in the green chamber. Reports say they are now divided on their earlier position of $76.5 per barrel reached by the joint committee.
The former governor of Kaduna State, Ahmed Makarfi, was given the task of resolving the budget crisis. He was named as the leader of the harmonisation committee on benchmark problem by the Senate. But before his committee could kick off, there were indications that his colleagues, who do not want to openly antagonise the executive, had in private supported their counterparts in the green chamber. Reports say they are now divided on their earlier position of $76.5 per barrel reached by the joint committee.
It is now feared that Makarfi may be unable to mobilise support for an amicable settlement of the feud. Why? The reason is not far-fetched: 2015 elections and the need to suppress opposition, just as Gbajabiamila had hypothesised in his position paper.
The Role of PDP Crisis
There have been strong indications that the crisis between the G-7 governors and the presidency which is ultimately connected to the 2015 elections might affect the 2014 budget if not addressed on time. Unlike in the Senate, Tambuwal is believed to be having difficulties prevailing on his colleagues to act with maturity during the ceremony.
There have been strong indications that the crisis between the G-7 governors and the presidency which is ultimately connected to the 2015 elections might affect the 2014 budget if not addressed on time. Unlike in the Senate, Tambuwal is believed to be having difficulties prevailing on his colleagues to act with maturity during the ceremony.
Days back, it was also alleged that he had tried his best to hold meetings with those lawmakers who remained loyal to the Alhaji Kawu Baraje-led New PDP, but failed.
On the surface, the disparity in oil benchmarks from both chambers of the National Assembly seems to be the reason why the president has failed to present the budget estimates to the National Assembly. Contrary to this, political analysts suggest that the reason why both chambers have not reached a consensus as to the oil benchmark could be linked to the crisis within the Peoples PDP.
According to media reports, “After a three-hour executive session on the MTEF, division among factions of the PDP still resurfaced with the new PDP in cooperation with the opposition APC winning the day. The New PDP and APC got 79 votes while the old PDP garnered 62 votes, when the decision on the money document was eventually put to vote.”
The 2015 Connection
The budget presentation may actually take place soon. However, it is doubtful it will be passed early this year unlike in 2013. This is because those in the opposition, the All Progressives Alliance (APC), already believed that the executive intends to divert a large chunk of crude earnings for other use.
The 2015 Connection
The budget presentation may actually take place soon. However, it is doubtful it will be passed early this year unlike in 2013. This is because those in the opposition, the All Progressives Alliance (APC), already believed that the executive intends to divert a large chunk of crude earnings for other use.
The argument is that as the nation approaches the election year, the executive is planning to make it difficult for states and local governments to get their shares of revenue as and when due. With this mindset, the lawmakers, especially those of them in the House, are less likely to allow the budget sail through without getting what they want.
The overall implication of this standoff on the economy and politics of the country is better imagined in the face of growing insecurity, dearth of infrastructure and other myriad of problems.
The Irony of the Budget Row
The presidency's projection on the oil benchmark might have been informed by a growing rate of massive oil theft which the president has continued to condemn and lament over. He stated recently that some powerful individuals were behind the oil theft, which has had a sustained negative impact on the economy.
The presidency's projection on the oil benchmark might have been informed by a growing rate of massive oil theft which the president has continued to condemn and lament over. He stated recently that some powerful individuals were behind the oil theft, which has had a sustained negative impact on the economy.
However, if the 2.3883 million barrel per day projection for 2014 by the presidency is acceded to, it would be interpreted that Nigeria has conceded to a very high rate of crude oil theft and bunkering.
It was against this mindset that even when the Senate had approved the MTEF based on a benchmark of $76.5 per barrel, the House used a benchmark of $79 per barrel, the very reason Jonathan deferred his budget presentation.
But the suspicion over what was responsible for the president's sudden change of mind was heightened among pundits because in 2011, the two chambers did not pass the same benchmark and Nigeria still had a budget presentation. Similarly, in 2012, the House passed the MTEF but the Senate did not, yet there was budget presentation.
There is also the belief among some of the lawmakers that the deferment of the budget presentation by Jonathan could be attributable to issues beyond the MTEF, because in time past, budget had been passed when the MTEF position of both chambers were not harmonised.
The spokesman of the House, Hon. Zakari Mohammed, said the House was not to be blamed for the situation: “It is not our fault as a House that the budget was not presented because, according to the law, we are still within the time frame for considering the MTEF. The law states that “not later than six months” and the House received the document on the 17th of September, so it is not as if the House is not on top of its job; it will still go ahead with its consideration."
But he was quick to add: “It is left for you (the people) to read between the lines,” as to why the presentation was abruptly stalled. Mohammed said only the president or his aides could give the real reason for calling off the session just as he dismissed plans to embarrass the president: “The House is made of responsible people and cannot descend that low.”
However, even if the MTEF was the reason for the deferment, it is not out of place to also assume that the decision might have also saved the presidency a huge embarrassment.
However, even if the MTEF was the reason for the deferment, it is not out of place to also assume that the decision might have also saved the presidency a huge embarrassment.
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