CONFAB Committee In Deadlock Over Derivation Principle, Resource Control

Posted by African Examiner Ayo Balogun, Featured, Latest Headlines Tuesday, May 6th, 2014

Ayo Balogun

The Committee on Devolution of Power after an extensive debate on Tuesday could not reach an agreement on the twin issues of derivation principle and resource control, at the on-going National Conference in Abuja.

The Committee which sat in a closed session for four hours during the morning session resumed deliberations after lunch break and sat for another three hours listening to opinions of each of the members.

It was the second day these issues were considered by the Committee co-chaired by former governor of Akwa Ibom State, Obong Victor Attah, and the former Inspector General of Police, Alhaji Ibrahim Coomasie.

Also mentioned in the course of the debate was the demand by delegates from the north for the reintroduction of the on-shore off-shore oil dichotomy which implies that oil produced within certain nautical miles off the seashore should not enjoy derivation principle.

The position was stoutly opposed to by delegates from the south, particularly those from Akwa Ibom State whose oil production is principally off-shore although with sufficient share of environmental degradation.

They stated that based on the position of the Federal Government in 2003 which led to the passage of a bill by the National Assembly for the abolition of the on-shore off-shore oil dichotomy; the matter could not be re-opened for any reason whatsoever.

In his contribution to the debate on derivation principle, Professor Nsongurua Udombana noted that two of Nigeria’s Constitution since independence including that of 1960 in Section 134(2); and that of 1963 in Section 140(1) had provided that 50% royalty be paid to regions in respect of any minerals extracted from the region.

He therefore urged the Committee to amend Section 162(2) of the 1999 Constitution which provides for a minimum of 13 per cent derivation revenue to states in respect of natural resources extracted from those states to be amended to reflect 50 percent.

Attah told journalists after the sitting that deliberation on the issues would continue on Monday after the work-free days announced by the Federal Government, which principally affects the Federal Capital Territory.

Meanwhile the Committee on National Security has recommended the scrapping of the Ministry of Police Affairs, which it said should be replaced with the creation of the Ministry of Homeland Security.

The new ministry, if created, would coordinate activities of the National Guard, Nigerian Police Force, Civil Defence Corps, and the Nigerian Prisons Service.

However, following in the footsteps of the Committee on Devolution of Power, it said in its recommendations that the present centralised police structure should remain although it should be reformed to make it more effective and representative of the federal character.

Also, the Police Council would remain the body responsible for force policy, finances, organisation and standards.

It would also play a far greater role in shaping the aims and objectives of the service and would be responsible for the appointment of the Inspector- General of Police on the advice of the Police Service Commission.

In the same vein, the Police Service Commission would continue to be responsible for appointment, promotion and discipline of all officers below the IGP except the operational control of the Force which is vested in the IGP.

It is expected to be independent enough to guard against nepotism in recruitment, discipline and promotion and the dominance of the service by any single or few ethnic groups.

The Committee has also recommended the creation of Nigerian National Guard Corps to handle internal conflicts and border control. Within it would be established a Rapid Response Force to deal with emergencies at all levels of government.

Still within the Ministry of Homeland Security would be established a VIP Protection Department and the creation of Security and Intelligence Services Inspectorate and Disciplinary Service Commission.

The Committee on Public Finance and Economy played host to officials of the Central Bank of Nigeria led by the Deputy Governor, Corporate Services, Alhaji Suleman Barau, who spoke on the challenges of public finance and revenue generation in the country.

Alhaji Barau commended the Federal Inland Revenue Service (FIRS) for increased revenue generation to N4.7 trillion which he said was the size of the nation’s budget.

He suggested the setting up of a Fiscal Responsibility Commission at both the state and local government level.

According to him, the CBN was interested in increasing the amount of money in the Excess Crude Account so that the country could save for the raining day and wants the committee to recommend a constitutional framework to manage the excess crude account.

He said the CBN has ensured financial stability and that the inflation rate is now single digit, but stressed that the high unemployment level in the country was a big drawback to the economy.

Committee members raised two vital concerns to the CBN team. The first was the high interest rate which is stifling businesses in the country and what becomes of the billions of naira spent to rescue ailing banks.

The Deputy Governor said the bank was more concerned with lowering the inflation rate and ensuring stability of the exchange rate. He said the high interest rate was the result of the high cost of doing business in the country especially power and security.

On the desirability of the Sovereign Wealth Fund when the people are living in poverty, the deputy governor insisted that despite the challenges of development besetting the nation, the country still needs to save for the future.

He said CBN made about N270 billion into federal government coffers in the last four years. He however insisted that the bank was not a revenue generating bank.

Recommendations:

• He suggested that the executive should be given time frame within which to submit the budget to the legislature.

• He wants the legislature to rather reduce budget and not to increase it to incur more debt.

• That State Assemblies should have the responsibility for establishing sharing formula for allocation from state’s joints accounts.

• That a Fiscal Responsibility Act be entrenched in the Constitution to cover all tiers of government.

• Property tax should remain a local tax but the administration should fall on the state government.

The Minister of Finance represented by the Chairman of the Federal Inland Revenue Service (FIRS) also appeared before the committee.

The committee took him up on how well the revenue of the nation has been managed. On waivers and concession, the committee sought to know how the ministry was regulating waivers as well as regulations put in place to monitor the use of Intervention grants.

On non-implementation of budget, a member also wanted to know what constituted external generated revenue and the chairman admitted that the ministry has issues with waivers.

He however said that he could not speak on the issues raised and suggested that the relevant government officials would be in a better position to do so.