President, Govs Finally Agree to Stop Subsidy Deductions

The crisis rocking the Federal Accounts Allocation Committee (FAAC) over the sharing of federal allocation for September was resolved early this morning at a marathon meeting between President Goodluck Jonathan and the governors.

It was decided that the deductions being made by the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Product Pricing Regulatory Agency (PPPRA) to finance fuel subsidy should be stopped henceforth following objections by the governors on transparency issues.

The states had refused to attend the September meeting of FAAC because of the deductions which invariably reduce what is available to be shared by the states.

In Lagos State, former governor and national leader of the Action Congress of Nigeria (ACN), Asiwaju Ahmed Bola Tinubu, voiced his opposition to the operation of Sovereign Wealth Fund (SWF), describing it as “illegal and fatally flawed”.

This morning’s decision to suspend the deductions was taken, according to sources, partly to prevent a public backlash in the event that salaries are not paid this week ahead of the Sallah celebrations.

Earlier yesterday, the governors had met at House 7 with Jonathan before adjourning to meet separately and take a common position on the issues at stake ahead of the evening meeting where requisite government agencies were in attendance with documents to help convince them.

The evening meeting was scheduled for 8pm but started shortly after with officials of the Petroleum Ministry, Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mr. Austin Oniwon, and some officials gearing for power point presentations.

The meeting which held in the office of the First Lady where the President has been using temporarily pending the completion of the renovation of his office was filled to capacity.

State Accountant-Generals, prodded by their Governors, stormed out of the Federal Accounts Allocation Committee meeting insisting that deduction from source for petroleum subsidy and other deductions must be returned and shared according to the law.

Governor Peter Obi of Anambra State, who is the vice-chairman of the Nigeria Governors Forum, told THISDAY that there are no issues over the SWF, maintaining that the governors gave the Federal Government the go-ahead to kick-start the savings with the $1 billion that had already been set aside.

“There will be no court action over it,” he said, disclosing that further savings in the future would be agreed upon by all before they are added to the account.

But Tinubu gave hard knocks on the Sovereign Wealth Fund (SWF) yesterday, describing it as illegal, fatally flawed and a scandal in waiting “which should either be scrapped or modified”.
Tinubu, who made this position known through an article entitled “The Sovereign Wealth Fund: The Ends Do Not Justify the Means”, explained that the SWF because it violates constitutional provisions as regards the allocation of revenue to the three tiers of government.

According to him, the Fund gives the Federal Government unlawful ownership and control of funds belonging to states.
He added that the structures establishing it lack transparency which he said would promote misuse of funds as well as malfeasance.

Tinubu argued that the Fund was flawed because it was forced down the throat of state governments, saying the law establishing it should have made participation voluntary so that any state wishing to participate can do so at its own leisure and unwilling states given their full allocations without being pressured.

The former governor also remarked that structural flaws in the law provide “the administering authority” unrestrained powers to set up countless numbers of “shadow companies” across the world “to hire any number of outside consultants, to incur unlimited debt and to invest in all types of risky investments”.

While arguing that the Fund is a breach of the law and a deliberate attempt to undermine the states’ fiscal independence, Tinubu said the Federal Government had resorted to lobbying the governors to buy into the project because it knows that SWF Law lacks the potency to stand in the face of the law.

However, Tinubu said he was not totally opposed to the establishment of the Fund because it may be useful in the nearest future but added that the Federal Government should fund it from its own revenue and make participation by states voluntary.