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House of Reps allege international oil companies may be evading taxes

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The Nigerian House of Representatives has stated that International Oil Companies operating in Nigeria may be evading taxes by making capital allowances claims without the Certificate of Acceptance of Fixed Assets (CAFA).

This was disclosed during Wednesday’s plenary session as the committee investigating the Structure and Accountability of the Joint Venture (JV) Business and Production Sharing Contracts (PSCs) probed Shell Petroleum Development Company of Nigeria, Total Energies and First E and P.

They noted that the CAFA certificate signified the basis for capital allowances claims.

Not sufficient: The Committee, chaired by Rep. Abubakar Fulata, revealed that the taxes paid to the FIRS by IOCs were not sufficient, as FIRS does not rely on Stock Certificate of Crude Oil and Certificate of Acceptance of fixed Assets, he said.

Reo Fulata also added that the Stock Certificates gave clearer pictures of the oil being lifted while the CAFA certificate was the basis for capital allowances claims.

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  • The House claimed that “Shell, Total and First E & P were in violation of Nigerian law for making capital allowances claims without the CAFA certificate”.

The committee also said the IOCs were not only bound by the PT Act but also had no right to select which laws to obey and disregard, citing that the IOCs respond to the committee with a stock certificate, capital allowance enjoyed, and the contributions to NNPC-JV and PSCs Account.

For the record: Nigeria’s crude oil export rose to a record N11.53 trillion in the first half of 2022, an 88.5% rise compared to N6.12 trillion recorded in the corresponding period of 2021 and a 39% increase from N8.29 trillion in H2 2021.

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Nigeria’s crude oil export accounted for 79.5% of the total exports recorded in the review period, representing the highest since the first half of 2019. Specifically, Nigeria exported merchandise between January and June 2022 worth N14.51 trillion, an increase of 81.2% recorded in the same period of 2021.

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Lagos debt good as it is used to executive projects – Budget Commissioner

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The Lagos State Commissioner for Budget and Economic Planning, Samuel Egube, has maintained that borrowing is good if it is used to sustain a revenue profile,

The Commissioner also noted that the state government has used its debt to conclude some projects.

Egube made the comment when he appeared as a guest on a Channels Television programme, Sunrise Daily, on Monday, November 28, 2022, he said that debt is not a problem in itself but rather the way it is structured.

Reason for clarification: Egube’s comment is coming against the backdrop of concerns by some interest groups over the debt profile of Lagos state, which has topped the list of highly indebted states in the country.

Lagos State owes N797.304 billion out of the N5.281 trillion owed by the sub-nationals, as of June 30, 2022, according to data from the Debt Management Office (DMO).

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Egube pointed out that the Lagos State Government moderates the way it borrows, adding that the sum of N30 billion has been projected to be borrowed in 2023.

More loans for Lagos: The commissioner noted that the state government is working within its sustainable limits as the debts are used to service and procure capital expenditure, adding that the government will continue to borrow at reasonable levels. He said:

  • Debt is not a problem in itself, it’s the way the debt is structured. Borrowing is good if it is used to sustain a revenue profile. Lagos state has used its debts to conclude some projects. We are working within our sustainability limits, debts are used to service and procure capital expenditure, we have a stronghold on the sustainability framework, and we will continue to borrow at reasonable levels. 
  • ‘’The Lagos state development plan is based on private sector participation, there is a lot of moderation when it comes to borrowing for this year is less than last year. N30 billion is proposed to be borrowed for 2023. The Lagos state development plan’s primary target is to galvanize the people on the efforts towards making Lagos Africa’s model mega city that is safe, secure, functional, and productive.”

Lagos State development: Speaking further, Egube said that the state government’s development plan is centred around a thriving economy, adequate jobs, education, healthcare and modern infrastructure with the government targeting to increase its revenue base to 5% from 1.9% as its contribution to Gross Domestic Product (GDP).

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  • The plan has over 400 initiatives organized around a thriving economy, adequate jobs, education, and healthcare services, as well as modern/sufficient infrastructure, and driving effective governance Lagos state government is working towards taking its revenue base from 1.9% to 5% as its contribution to GDP. 
  • “What is being done to end poverty based on the poverty report from the NBS? Education; LASG is expanding educational facility access, and employing qualified teachers (in 2020, the pass rate was 29%, and in 2021 it was 80%). In healthcare, LASG is working towards better healthcare infrastructure, and hiring qualified healthcare personnel. 
  • ‘’In terms of infrastructure; LASG is developing the Lekki deep sea port, roads, and rail. All these will improve the people’s productivity, when the people are more productive, poverty in Lagos state will reduce drastically.”

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Delta State to receive N240 billion in derivation as debt hits N272 billion

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Delta State Government has revealed that the federal government has approved payments of N240 billion as crude oil derivation arrears since 2004, citing that it has received tranche payments of over N14 billion so far. 

This was disclosed in a statement by Delta State commissioner for finance,  Chief Fidelis Tilije, on Monday. 

He added that the state’s total debt profile currently stood at N272 billion as Niger Delta states, led by Rivers State, revealed they are using derivation arrears to boost infrastructure. 

 Tilije noted that the N240 billion refund from the Federation Accounts Allocation Committee (FAAC), was not a loan but the state’s share of 13 percent crude oil derivation arrears from 2004 till date. 

  • He said, “The total debt profile of Delta State as we speak is N272 billion. Out of this, N84 billion is due to contractors, and pension arrears are about N27 billion. 
  • “The rest are the debt profile,  most of that was actually inherited by the Ifeanyi Okowa-led administration. 
  • “And in these past months, we have a total expected refund of N240 billion with respect to the 13 percent oil derivation refund to nine states that is ongoing. 
  • “We had initially wanted to phase out many legacy projects that we wanted to complete, we approached the State House of Assembly and got approval to discount N150 billion, which we pruned to N100 billion as a bridging finance facility from the N240 billion. 
  • ”I did say recently that out of this N240  billion that is expected from FAAC receipts, Delta has received N14.7 billion in three quarterly installments.” 

He added that out of the N100 billion bridging finance, Delta State has accessed N30 billion from the commercial market. 

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He also noted that if the state government had totally taken or fully discounted the N240 billion FAAC refund, the next successive government will fall back to the experience Gov. Okowa had in 2015. 

“So, unlike the other oil-producing states that fully discounted their refunds, Okowa decided to be his brother’s keeper, take a percentage of the N240 billion and leave the rest for the incoming government to access over a period of four years. 

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  • Besides, if we had gone ahead to discount the N240 billion in full, we would have been able to clean up all our outstanding debt,” he added. 

For the record: Recall Nairametrics reported last week that the governor of Rivers State, Nyesom Wike disclosed how he managed to finance the numerous projects in the state currently being commissioned by several political leaders across party lines. 

He said the projects were financed with accumulated 13% derivation funds, which Rivers and other Niger Delta states were owed since 1999. The funds were recently released by the presidency. 

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Yobe North: Senate president loses again as Appeal Court affirms Machina as APC senatorial candidate

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Senate President Ahmed Lawan has once again lost out as the Court of Appeal in Abuja has affirmed Bashir Sheriff Machina as the authentic All Progressives Congress (APC) candidate for Yobe North Senatorial District.

For several months, Machina and Lawan, who represents Yobe North in the upper legislative chamber have been at loggerheads over the ticket won by the former at the primary held on June 9, 2022.

The court, on Monday, upheld the judgment of the Federal High Court sitting in Damaturu, Yobe State, which held that the resident of the Senate,  Ahmed Lawan, is not the APC candidate for Yobe North Senatorial District in next year’s election into the National Assembly.

Non-participation in primary: The court had submitted that Mr. Lawan did not participate in the legally recognized primary election of the APC to select its candidate in the election held on 28th May 2022.

Delivering judgment on the appeal filed by the Senate President, a 3-member panel of the appellate court led by Justice Monica Dongban-Mensem, held that the primary election conducted by the party on June 9 is invalid as it was in breach of the constitution.

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The APC made a case at the appeal court for itself and its preferred candidate, Ahmed Lawan, but failed to make him a co-appellant.

Mr. Lawan appeared in the case as the 2nd respondent indicating that he and the APC were working at cross purposes while trying to achieve a goal.

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The court of appeal directed the appellant (APC) to pay the sum of N1 million to the 1st respondent (Bashir Sheriff Machina) as cost.

For catchup: Recall that about 2 months ago, a Federal High Court sitting in Damaturu ordered the APC and the INEC to recognize Bashir Machina as the senatorial candidate of the party.

Lawan had contested the presidential primary of the ruling party at the same time as the senatorial primary was won by Machina. The Senate president, however, lost to Bola Tinubu, a development that forced him to jostle for the senatorial ticket but Machina insisted that he won’t step down.

Machina had earlier distanced himself from the controversial notice of withdrawal from the race, which was purported to have emanated from him and went viral.

The poorly written letter, which was dated September 4 and addressed to the APC National Chairman, Senator Abdullahi Adamu, said Machina had withdrawn and resigned from the party.

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