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CAC Faces Operational Shutdown

CAC Faces Operational Shutdown

CAC faces operational shutdown as Reps suspend its funding

The continued existence of Corporate Affairs Commission (CAC) hangs in the air as the House of Representatives committee on finance has threatened to shut down the commission’s operation.

The lawmakers also ordered the budget office of the federation not to provide funds to the commission until the finances of CAC has been checked.

The committee gave the directive on Tuesday during the interactive session on the 2022-2024 Medium-Term Expenditure Framework (MTEF).

Factors behind the threat

Lawmaker, James Faleke, who is the chairman of the panel, had queried the CAC for their failure to generate revenue higher than the commission’s expenditure.

It was gathered that the CAC had been underperforming in terms of turnover in four years, from 2016 financial year to 2019, and first quarter of 2021.

A breakdown of its turnover shows that in 2016, CAC revenue was N8.74 billion, but it spent N11.275 billion, a year after, it generated N10.896 billion as revenue, and spent N12.6 billion.

In 2018, CAC reported a turnover of N11.2 billion, while expenditure was N12.2 billion. In the following year, revenue generated was N12.7 billion, below the N13.790 billion it spent for the year.

For 2020 turnover, the commission’s revenue rose to N19.163 billion, higher than N13.2 billion expenditure for the same year, while in 2021, CAC’s estimated revenue was N20.74 billion, slightly above the N19.28 billion the government-owned entity estimated as expenditure.

But the CAC has generated N3.19 billion as revenue for 2021 first quarter, while it has spent N5.136 billion during the same three months period.

CAC spending money it’s not providing

Faleke queried the Registrar-General of CAC, Garba Abubakar, while faulting the financial operation of the commission. He said the CAC is spending the money it’s not generating.

He said, “When you pay yourself revenue and allowances that take away our revenue, that you ought to have remitted to the government, it is not acceptable.”

Faleke also stated that CAC’s finance department is, “putting figures together so that the money you will remit to the federation account that will help Nigeria will not be there.”

CAC claims gap between revenue and expenditure is strange

In the commission’s defense, Abubakar said settlement of outstanding liabilities gulps the capital of CAC, while Ibrahim Gano, an accountant with CAC, said its strange that the government corporation spent more than what it is generating.

However, he said that is not the true picture of the situation with its expenditure. Gano said the gap is caused by CAC’s accounting system.

In his explanation, Gano said, “Liabilities that are due for a given year were recognised and they were duly impacted on our account. Liability was recognised in our balance sheet.

“So, there was no cash outlay for such transactions, liabilities were recognised in a given year, for example, in 2019, it impacted on the Profit and Loss (P and L), but the payments were actually not done, and as such, liabilities were recognised as liabilities to be paid in the succeeding year.

“For 2021, the possible explanation is apparently because there were payments that were done upfront, for example, housing of staff, staff housing allowances, payment were actually done, but we amortised them over a period of 12 years, so it will impact on your P and L, there is an outlay that a certain amount has been spent. But you take monthly amortisation that are being made, amortisation means expenses.” He said.

CAC accused of cooking it’s accounting books

Member of the finance committee, Sada Soli, accused the CAC of cooking their financials to make it difficult for laymen to understand their financial operation.

Soli said that was why there was confusion with CAC’s accounting system, “Do you know what is cooking in accounting?” He asked the representatives of CAC.

The lawmaker said, “Are you sure that you are not cooking your books because when you cook your books, it is always hard for a layman to understand? That is what we are facing now. If you say that you have generated this, but you have expended this.”

Shutdown of CAC, funding of commission suspended

The committee of finance said it will have to shutdown CAC if it means saving the revenue of Nigeria, as they directed the commission to provide line by line expenditure details from 2018.

Faleke’s commission in its final submission said CAC is borrowing money in advance, to pay for liabilities upfront despite not having the money.

He directed the budget office to invite corporate affairs to its office, but not to have an agreement with them until the committee of finance is done with CAC.

“We are making this clear to you, there should be no budgetary approval for them until we finish with them. If we have to close down corporate affairs to make money for Nigeria, let us do it.”

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Business

Tinubu increases 2025 budget to N54.2tn

President Bola Tinubu has raised the proposed 2025 budget from ₦49.7 trillion to ₦54.2 trillion, citing additional revenues generated by key government agencies.

The President conveyed the budget adjustment in separate letters sent to both the Senate and the House of Representatives, which were read during plenary today by the Senate President, Godswill Akpabio.

According to President Tinubu, the increase was driven by ₦1.4 trillion in additional revenue from the Federal Inland Revenue Service (FIRS), ₦1.2 trillion from the Nigeria Customs Service (NCS), and ₦1.8 trillion generated by other government-owned agencies.

Following the announcement, the Senate President has referred the President’s request to the Senate Committee on Appropriations for urgent consideration.

He assured lawmakers that the budget would be finalised and passed before the end of February.

With this development, the National Assembly is expected to fast-track deliberations to ensure timely approval and implementation of the 2025 budget.

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NMDPRA seals off 19 illegal LPG depot in Delta

The Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, has sealed 19 illegal Liquified Petroleum Gas, LPG, and category D cooking gas outlets in Delta State.

Speaking with newsmen on Tuesday in Warri, Coordinator, NMDPRA in Delta, Victor Ohwodiasa said the illegal gas outlets were sealed within the past two weeks.

He said they were shut in Orerokpe, Ogwashi-Ukwu and Warri and its environs of the state.

The category D class of LPG operators are the ones within localities that refill gas from licensed gas plants for customers to pick up from them.

Ohwodiasa said the illegal gas outlets were shut over offences ranging from lack of prerequisite approvals to operating such facilities in unsafe locations.

“During the operations, about 28 illegal outlets were spotted by the authorities. We tried to see if it is possible to have them regularised as they were wrongly sited.

“The outlet that was sealed in Ogwashi-Ukwu was a five metric tonnes refilling plant constructed on a roadside closed to a high tension cables.

“The authority looked at the environment, it was wrongly sited on a right of way and has no approval. It was sealed and a relocation order issued immediately.

“Other offenders were the ones doing what we called, “decanting”, meaning bottle to bottle transfer. We do not allow that.

“What they are expected to do is “bottle swap”, bring your empty cylinder and go with a filled one,” he said.

The coordinator said the essence of the exercise was not to frustrate the small scale gas business owners but to ensure they operate in a safe and secured environment.

Ohwodiasa appealed to landlords not to allocate portions to the LPG category D operators who want to do illegal business on their premises or properties.

According to him, the essence is to prevent possible fire outbreak that could destroy lives and properties of the operators and the neighbours.

He said that NMDPRA was committed to ensuring lives and properties were adequately protected.

“Imaging someone storing cooking gas close to where welding operation is taking place or where a woman is frying beans cake or roasting corn. Once there is a leakage, the resultant effect will be catastrophic.

“If the operator of the illegal outlet does not appreciate his life, it is our duty to ensure he does not kill himself and others by illegally operating such a facility,” he said.

Ohwodiasa said the regulatory authority would continue to sustain the exercise in the state and assured that anybody found wanting would face the full wrath of the law.

He also said that any offender that refused to relocate his facility would be handed over to the relevant security agencies for prosecution.

The coordinator appealed to the public to report anyone transferring cooking gas from one cylinder to another to the NMDPRA for prompt action, “help us to serve you better”.

Ohwodiasa while assuring that the regulatory body would continue to sensitise the operators, said the authority had annual stakeholders engagement with the gas plant owners and the category D operators.

He also said the regulatory authority organised jingles on Radio and Television stations to educate people on the best ways to handle cooking gas because of its volatility.

The coordinator thanked the Chief Executive of NMDPRA, Ahmed Faruok for his consistent support for the state’s operations.

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FG bans export of crude oil allocated to domestic refineries

The Federal Government has banned the export of crude oil meant for domestic refineries in the country.

About 500,000 barrels of crude oil per day meant for domestic refining have been finding their way to the international market as producers and traders shortchange the policy for quick foreign exchange proceeds.

Acting through the upstream sector regulator, the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, the government warned that it will henceforth deny export permits for crude oil cargoes intended for domestic refining.

The commission in a statement in Abuja, insisted that any changes to cargoes designated for domestic refining must receive express approval from its chief executive.

In a letter dated February 2, 2025, addressed to exploration and production companies and their equity partners, the commission’s Chief Executive Officer, Engr. Gbenga Komolafe said diverting crude oil meant for local refineries is a violation of the extant laws of the country.

At a meeting last weekend, attended by more than 50 critical industry players, both refiners and producers blamed each other for inconsistencies in the implementation of the Domestic Crude Supply Obligation, DCSO, policy.

While refiners claimed that producers are not meeting supply terms and preferred to sell crude outside, forcing them to look elsewhere for feedstock, producers countered that refiners hardly meet commercial and operational terms, forcing them to explore other markets elsewhere to avoid unnecessary operational bottlenecks.

They, however, agreed that the regulator has put in place appropriate measures for effective implementation of the law.

The regulator cautioned against any further breaches from either party, and advised refiners to adhere to international best practices in procurement and operational matters.

The commission reminded producers not to vary the conditions stated in the DCSO policy without obtaining express permission from the chief executive before selling crude outside the agreed framework.

Komolafe referenced Section 109 of the Petroleum Industry Act (PIA) 2021, which aims to ensure stable supply of crude to domestic refineries and strengthen the nation’s energy security.

He said NUPRC would, henceforth, strictly enforce the policy regarding implementation and defaults by oil companies.

He stated that significant regulatory actions had already been taken by the commission, in line with enabling laws to enforce compliance with the DCSO.

These actions, according to him, include development and signing of the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023, as well as the creation of the DCSO framework and procedure guide for implementation.

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