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Audit report exposes Customs, NNPC under- remittance to Federation account.

Aghughu Adolphus, Auditor-General of Federation

 

Eyewitness reporter

The 2019 Auditor- General’s Federation Annual Report has shown that the country may have been shortchanged to the tune of N666.15 billion due to the discrepancies observed in the financial books of the Nigerian National Petroleum Corporation (NNPC) and Nigeria Customs Service (NCS).

Section 85(5) of the 1999 Constitution of the Federal Republic of Nigeria, (as amended), states that “the Auditor-General shall, within ninety days of receipt of the Accountant-General’s financial statement, submit his reports under this section to each House of the National Assembly and each House shall cause the reports to be considered by a committee of the House of the National Assembly responsible for public accounts”.

In compliance with the provisions of the 1999 constitution of the Federal Republic of Nigeria, on August 18, 2021, the Auditor-General for the Federation, Aghughu Adolphus, submitted to the Clerk of the National Assembly the Annual Report on the Federal Government of Nigeria Consolidated Financial Statements (CFS) for the year ended 31st December 2019.

A review of the Audit report revealed that some of the figures, particularly those of the NNPC and NCS did not tally.

Thus, it may have led to a huge loss of revenue to the government.

On page 50 of its 2019 Annual Reports and Financial Statements, the NNPC-National Petroleum Investment Management Services (NAPIMS) reported that it transferred the sum of N1.27 trillion to the Federation Account

However, in the 2019 Audit report, the Accountant-General of the Federation (AGF) who is the Chief Accounting Officer for the receipts and payments of account of the federation,  noted in his records submitted for audit that only N608.71 billion was received as a remittance by NNPC into the Federation Account for 2019.

This shows a difference of N663.90 billion, between the figure NNPC-NAPIMS reported in its audited financial statements and the amount the AGF claimed the NNPC transferred into the Federation Account as remittance for 2019.

Similar discrepancies were noted in the financial books of the Nigeria Customs Service.

As noted in the Auditor’s report, the NCS generated revenue of N841.27 billion in 2019. This exact amount was supposed to be remitted by NCS to the Federation Account.

However, only the sum of N839.02 was remitted to the Federation Account through the Nigerian Integrated Customs Information System II (NICIS II), indicating that the total money remitted fell short by N2.26 billion.

If the NCS’s N2.26 billion variance is added up with the N663.90 billion shortfall observed in the financial statements of NNPC and AGF’s record, it brings the total figure to N666.15 billion.

As the Auditor General noted in the report, these discrepancies mean a loss of revenue to the government and could lead to difficulty in funding the (2019) budget.

True to the worries expressed by the Auditor-General in the 2019 Audit report, it was actually difficult for the government to fund its 2019 budget as the government resorted to borrowing.

In December 2018, President Buhari presented to a joint session of the National Assembly a proposed budget of N8.83 trillion for the 2019 fiscal year.

In his budget presentation, the President noted that the 2019 budget had a projected deficit of N1.86 trillion which was to be financed by borrowing.

The country’s Finance Minister, Zainab Ahmed stated clearly that, “we (the government) intend to fund the 2019 budget through borrowing locally and internationally with a spread of 50:50”, indicating that the government lacked the necessary revenue to fund its budget for that year.

The 2019 budget was not the first the government-financed through borrowed funds.

Prior to this, the government has borrowed both home and abroad to help to finance its budgets and to fund infrastructure projects, the trend which continues till today.

However, if the N666.15 billion arising from the differences in the financial records provided by the NNPC and AGF, as well as that of the NCS had been fully remitted to the Federation Account as the Audit report showed, it could have potentially reduced the amount the government borrowed to fund the 2019 budget by 35.71%.

This could have also reduced the country’s debt burden which currently stands at N35 trillion and is projected to rise to the tune of at least N41 trillion before the end of 2022.

While the government continues to devise ways to tackle the problem of revenue shortages that have made it difficult to fund its annual budgets, economic experts advised that the Federal Government should follow the recommendations of the Auditor General by ensuring that the management of the NNPC provide reasons for the discrepancy between what it reported in its NNPC-NAPIMS audited financial statements and the figure reported by the AGF as NNPC-NAPIMS remittance into the Federation Account for 2019.

The same should apply to the management of the NCS.

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Customs

Customs buckles as it suspends implementation of 4 per cent FOB charge

Funso OLOJO 
In a manner demonstrative of a listening administration,the management of the Nigeria Customs service has suspended the implementation of the controversial 4 per cent Free on Board(FOB) charge on imports.
The suspension followed the outcry that greeted the implementation of the novel charge which importers and their agents said was jumped on them by the customs without notice nor consultation.
To allow enough time for stakeholders’ consultation and sensitization, the Customs said the suspension was sequel to the ongoing discussion with the Minister of Finance, Mr Adewale Edun.
In a press statement by the Customs management , the service disclosed that the timing of the suspension aligns with the exit of the contract agreement with the Service providers, including Webb Fontaine, which were previously funded through the 1% Comprehensive Import Supervision Scheme (CISS).
” The Nigeria Customs Service (NCS) hereby announces the suspension of the
implementation of 4% Free-on-Board (FOB) value on imports as provided in Section 18(1)(a) of the Nigeria Customs Service (NCSA) 2023.
“This is sequel to ongoing
consultations with the Honourable Minister of Finance and Coordinating Minister of the Economy, Mr Olawale Edun and other Stakeholders.
“This suspension will enable comprehensive stakeholder engagement and consultations regarding the Act’s implementation framework.
“This presents an opportunity to
review our revenue framework holistically.
“Under the previous funding arrangement repealed by the NCSA 2023, separating the 1% CISS and 7% cost of collection created operational inefficiencies and funding gaps in customs
modernisation efforts.
“The new Act addresses these
challenges by consolidating “not less than 4% of the Free-on-Board value of
imports,” designed to ensure sustainable funding for critical customs operations and modernisation initiatives.
“This transition period will allow the Service to optimise the management of these frameworks to serve our stakeholders and the nation’s interests better.
“The Act further empowers the Service to modernise its operations through
various technological innovations.
“Specifically, Section 28 of the NCSA 2023 authorises developing and maintaining electronic systems for information exchange between the Service, Other Government Agencies, and traders.
“The Service is already implementing several digital solutions, including the recently deployed B’Odogwu clearance system, which stakeholders are benefiting from through faster clearance times and improved transparency.
“Other innovative solutions authorised
by the Act include; Single Window implementation (Section 33), Risk management systems (Section 32), Non-intrusive inspection equipment (Section 59) and Electronic data exchange facilities (Section 33(3)).
“The suspension period will allow the Service to further engage with
stakeholders while ensuring proper alignment with the Act’s provisions for
sustainable funding of these modernisation initiatives.
 “The NCS remains committed to implementing the provisions of the Act in a manner that best serves our stakeholders while fulfilling our revenue generation and trade facilitation mandate.
“We will communicate the revised implementation timeline following the conclusion of stakeholder consultations” the service promised.
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Headlines

MARAN convenes public discourse on controversial ICTN among contending parties 

Funso OLOJO 
Following the controversies that have trailed the planned introduction of the International Cargo Tracking Note, (ICTN), the Maritime Association of Nigeria, MARAN has disclosed that it is time to put the controversies to rest once and for all.
To this effect, the association, the leading maritime beat association in the industry, is set to organise an all important roundtable to examine all pertinent issues and controversies surrounding the concept and proffer lasting solutions.
The roundtable will bring together relevant players in the industry under one roof at the MARAN International Press Center in Apapa on Thursday, February  27, 2025 to dissect the subject – matter and point to the way forward.
Some of the key stakeholders expected at the event include Dr. Eugene Nweke of the Sea Empowerment and Research Center, SEREC, Dr. Segun Musa, Managing Director, Widescope Group will be on hand to deliver insightful address.
Other critical stakeholder expected at the event include Dr. Alban Igwe of the Importers Association of Nigeria and a representative from the Shippers’ Association Lagos State,SALS.
Two critical government agencies, the Nigerian Shippers’ Council, NSC who warehouses the ICTN, shall be delivering a paper on “Prospect And Challenges Of Proposed ICTN: NSC’s Perspective”, while the Nigeria Ports Authority, NPA, the former custodian of the project ,shall also be speaking on “Prospect And Challenges Of Proposed ICTN, NPA’s Perspective” on that day.
Speaking on the need for the roundtable, Mr. Godfrey Bivbere, President, MARAN, disclosed that there is an urgent need to put the controversies surrounding the issue to rest once and for all
“Since the news of the planned reintroduction of the ICTN filtered out, there have been widespread controversies from both the protagonists and antagonists of the concept, with each divide justifying its position”, the MARAN President noted.
“It has been a subject that has polarized the maritime industry and as the leading maritime beat association in Nigeria and in furtherance of our advocacy role, MARAN has decided to bring all the contending players under one roof to settle this issue once and for all in order to move forward and develop our sector which is very critical to the nation’s economy”, Bivbere concluded.
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Freight Forwarders call out NPA over duplication, illegal imposition of payment of ETO Call- up system fee on importers

Funso OLOJO
Freight Forwarders, under the egies of the Council of Managing Director of Licensed Customs Agents(CMDLCA) has accused the Nigerian Ports Authority(NPA) of illegally imposing the payment of fees for the ETO Call- up system on importers and their agents.
The National President of the Association, Mr Lucky Ayis Amiwero, make this allegations in his petition to the Managing Director of the NPA, Dr Abdulahi Datsotho.
In the petition dated January 25th, 2025 and a copy each sent to the Secretary of the Government of the Federation, Minister of Finance, Presidential Enabling Business Environment committee(PEBEC) and the Nigerian Shippers’ Council, Amiwero claimed that the payment of ETO Call- up system fees was not backed by any law.
He further submitted that the payment was a duplication as the importers and their agents have already paid for the service under the Port lease/ concession agreement as vehicle entry permit (VEP) and tenure parking rate(TPR) under maximum tariff for cargo due.
According to him ” ETO CALL-UP SYSTEM is not tied to any service on Import or Export for the processing of goods.
“it has no service that directly involves service to Importer/Licensed Customs Agents(LCA) but is an  infrastructure developed for the access of Transport in to the Port, as a result of faulty Port Lease/ Concession Agreement that exclude Trailer Park and Holding Bay  which clearly contravenes  Trade Facilitation Agreement(TFA)”
Amiwero said that it was the responsibility of the NPA to free flow of traffic in and out of the Port to facilitate trade and not that of the importers and their agents.
He said the agency has to do this with passing its financial implications to the importers and their agents.
” It is strictly Nigerian Ports Authority(NPA)  responsibility  to regulate Traffic, within the Limit of a Port or the approach to a Port  under Section  32-(a) .
“it is the legal responsibility of the authority(NPA) to provide for ease of access to the port , it is part of Nigerian Port infrastructure which is to facilitate trucks in to the Port.
“It is the responsibility of the Nigerian Ports Authority (NPA) to regulate the Traffic and not that of the Licensed Customs Agents/Importer.
” The ETO CALL_UP system is an infrastructure that is owned and operated by NPA contractor to perform NPA function,   due to faulty lease agreement  which, initially excludes Trailer Parks and Holding bay from the Lease / Concession, Agreement ,creating the bottleneck and gridlock to Access the Port.
“The Lack  of legal framework to regulate the Economic interest in the Port, has given the Concerned Agencies in the Port, room to impose all  kind of illegal fees on the cargo interest without concern for Service tied to charges and who is responsible for  payment.
“This imposition makes our Ports one of the most expensive and unattractive within the sub-region with multiple charges, levies, fees which are not approved or  cargo related, just like the ETO- Call System introduced by NPA, that has no cargo  service tied to it, is clearly the responsibility of Nigerian Ports Authority(NPA) in line with Section 32-(a) Regulating Traffic, within the limit of the port or approach to the Port”
Amiwero further claimed that ETO Call- up system is part of the development of the Port which falls under the functions of the NPA which is part of the infrastructural development for the movement of vehicles.
Consequent on this, the freight forwarder wanted the NPA to utilise part of the 7 per cent Port development levy collected from importers and their agents on import for the execution and sustenance of ETO Call- up system.
“7% surcharge is paid by Nigerian Importers through the Licensed Customs Agents (LCA) on every import collected since 1978 till date.
“Nigerian Ports Authority(NPA) should utilize part of their 7% to provide for truck access to the  Port going to the Terminals, which is covered statutorily  under section 32-(a)”
He blamed the PBE and the NPA for leasing the existing holding bays for truck which has now resulted to traffic gridlock due to lack of space for trucks.
“The holding bay for trucks, that existed before  port concession agreement within and around the ports, was ceded out to Terminal Operators as well as Land space, without providing alternative.
“All such spaces were ceded to Terminal Operators, forcing the trucks owners to use the available Port access roads to hold empty containers and wait as holding bay awaiting access to the Port to load client consignment”
“Before the ceding of Port operation to Terminal Operator  in 2005, there was no such thing as Gridlock, each Port operated their Holding bay, where tucks wait to load their respective consignments in and out of the Ports.
“The Ports operated their holding bay and trailer parks as follows:
APAPA PORT: Holding bay are in the Port
TIN CAN ISLAND PORT: Its holding bay was at the front of the port
LILYPOND TERMINAL: Its holding bay was under the bridge in front of the Port
BRAWAL/PAN-ATLANTIC JETTY: its holding bay was in front of the Jetty and
TRAILER PARKS: was at Beger by Kirikiri Junction”
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