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Another NEITI audit reveals 5-year misuse of N582bn special funds

By on December 15, 2014

A fiscal allocation and statutory disbursement audit conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI), primarily to track extractive and non-extractive sector revenues remittances, sharing and allocations as well as utilisation among various levels of government in Nigeria between 2007 and 2011, has again revealed the reckless use of financial resources available to governments in the country within the period.

As conducted by NEITI with focus on how nine resource-rich states in Nigeria that are endowed with oil, gas and other mineral resources have been able to use monies accrued to them to advance the wellbeing of their indigenes, the report also examined remittances and management of extant special development funds such as Nigeria’s Excess Crude Account (ECA), Niger Delta Development Commission (NDDC), Natural Resources Development Fund, Ecological Fund, Petroleum Technology Development Fund (PTDF), Tertiary Education Trust Fund (TETfund) and Stabilisation Fund. It discovered that there were anomalies in the management of most of the funds.
Although released earlier, the full copy of the report which was recently obtained from the NEITI Secretariat in Abuja, showed that monies set aside in two special frameworks, the natural resources development fund as well as the ecological fund which were set up for special purposes, had been discretionarily used for purposes other than they were lawfully created.

It also showed that Nasarawa State, one of the underdeveloped states in the country, notwithstanding its rich solid minerals deposits and which was covered in the audit had budgeted and grossly misappropriated huge funds meant for the construction of a hydro power plant.
Nasarawa, according to the audit, had paid about N1, 471,625,617 in 2008 for a 20 megawatts (MW) Farin Ruwa hydroelectric power project with no actual work done at the project site. Accordingly, the only structure at the project site is a sign post and a block of building used as the security post, with no access road to the dam.
While shedding light on the management of monies allocated to the special funds within the period under consideration, the audit report noted that total transfers into the natural resources development fund in the five year period amounted to N365 billion but that these monies were not actually applied for the expected purposes.

It explained that not many Nigerians were aware that the natural resources development fund which was set up to develop alternative sources of revenue from natural resources existed but that it was used for other purposes that include; N275 billion used from 2007 to 2011 to service budget deficits, N94 billion used for the procurement of fertilisers, N106 billion released to the Ministry of Agriculture as loan, and N350 million released to PenCom for the purchase of a new office building.
The natural resources development fund, it explained, is now in debit of N339 billion ($ 1.9 billion) as a result of withdrawals for reasons other than its objectives.

On the derivation and ecological fund which is domiciled in the Office of the Secretary to the Government of the Federation (SGF), a total of N217.456 billion was allocated to it, but its utilisation was entirely different from its purpose.
For instance, N6.7 billion was released to the Federal Capital Development Authority (FCDA) for the provision of engineering infrastructure in Kubwa and Karshi from the fund, while the National Emergency Management Authority (NEMA) which is statutorily entitled to 20 per cent of the fund to aid its quick response to natural disaster, only got N23 billion from the fund with an outstanding N19 billion owed to it.
Other parties that indirectly benefitted from the fund were ministries, departments and agencies, state governments and Nigeria’s military formation. About N93 billion, N10.4 billion and N10 billion were reportedly released to the federal government, ministries and military from the fund amongst others.
The audit also stated that while the ecological fund office which is set up as a fund disbursing unit in the SGF is not allowed by law to initiate or implement projects, it however awarded 139 projects worth over N40 billion, paid out over N24 billion to project contractors and owing over N16 billion but only completed 36 of these projects.
Additionally, requests by state governments for funds to finance state-specific ecological problems in their states were equally granted directly by the president without recourse to the ecological fund office and processes set up to access the fund, therefore overlooking extant lawful procedures.
Talking about states’ management of funds that accrued to them, the audit said that with the exception of Rivers and Akwa Ibom states, other states should re-evaluate their recurrent expenditure profile, especially the overhead costs and free up resources for sustainable development.

States such as Imo for instance, it explained allocated only 2.3 per cent of its total revenue to education and health, while 72 per cent of revenues that accrued to it went to recurrent expenditure covering government running costs, wages and overheads. Bayelsa on the other hand spent 140 per cent and 125 per cent of its total revenues in 2009 and 2010 respectively as recurrent expenditure, therefore borrowing money to pay salaries and expenditure on capital projects.