Business

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.”

Business

CAC threatens to shut down PoS operators as deadline for registration expires

The Corporate Affairs Commission has said it will work with law enforcement agencies and other legal means to shut down recalcitrant Sales Operators who fail to register their businesses as its 60-day deadline lapses.

The Commission disclosed this in a notice Friday on its official X handle.

This comes after CAC on July 7, 2024, issued a 60-day deadline which expired on Thursday, September 5, 2024, for all PoS operators to register their businesses.

CAC noted that there was inadequate compliance with its directive, noting that those who decided not to register may be engaging in unwholesome activities.

“The Commission notes inadequate compliance with the directive for formalization when viewed from the background of the large number of POS operators in the country. Those who have taken steps to formalize in line with the Commission’s directive are commended for their positive attitudes.

“Recalcitrant operators have refused to adhere to the advice for formalization due possibly to engagements in unwholesome activities or for some reasons best known to them.

“We are here to make it clear that the Commission is working with Law Enforcement Agencies and other relevant stakeholders to deploy a comprehensive enforcement and sanction framework that may include not only possible shutdown but other severe legal Consequences.”

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria, AMMBAN, recently challenged the CAC’s registration directive.

Business

Dangote’s petrol to flood market from Sept 15 — NNPCL

The Nigerian National Petroleum Company Limited (NNPCL) has announced that Premium Motor Spirit (PMS), commonly known as petrol, from the Dangote Refinery will begin to flood the market starting on September 15, 2024.

This development follows the refinery’s commencement of petrol refining earlier in the week.

In a statement signed by the NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, on Thursday in Abuja, the company clarified that petrol prices would now be determined by market forces.

The statement addressed speculations about price control, reiterating that the downstream sector had been fully deregulated and that NNPCL would no longer fix fuel prices.

Adedapo Segun, NNPCL’s Executive Vice President of Downstream, emphasised that foreign exchange (forex) illiquidity had been a major factor influencing PMS price fluctuations, which are now regulated by the free market as mandated by the Petroleum Industry Act (PIA).

Segun also noted that the current fuel scarcity should ease within a few days as more filling stations recalibrate their systems and resume selling PMS.

He cited Section 205 of the PIA, which established that petroleum prices are governed by market forces rather than government intervention. The exchange rate, he added, significantly impacts fuel prices.

Regarding the supply of petrol from the Dangote Refinery, Segun stated that NNPCL was preparing for the September 15 timeline when products would be available for distribution.

He assured Nigerians that NNPCL is working closely with fuel marketers to ensure stations remain open and well-stocked to meet demand, while measures are being taken to prevent product diversions.

Segun’s comments come on the heels of the Federal Government’s announcement of an impending boost in petrol supply over the weekend, as vessels had started offloading while reaffirming that PMS prices would not be fixed by the government.

Business

PMS Prices are determined by free market forces—NNPC Ltd

The Nigerian National Petroleum Company Limited (NNPC Ltd.) has stated that foreign exchange (forex) illiquidity has been a significant factor influencing the fluctuation in prices of Premium Motor Spirit (PMS), which are governed by unrestricted free market forces, as provided for in the Petroleum Industry Act (PIA), 2021.

Speaking on TVC News’ “Journalists’ Hangout” show on Thursday, the Executive Vice President of Downstream, NNPC Ltd., Mr. Adedapo Segun explained that the current fuel scarcity was expected to “subside in a few days as more stations recalibrate and begin selling PMS.”

He said Section 205 of the PIA, which established NNPC Ltd., stipulated that petroleum prices were determined by unrestricted free market forces.

According to him, “The market has been deregulated, meaning that petrol prices are now determined by market forces rather than by the government or NNPC Ltd. Additionally, the exchange rate plays a significant role in influencing these prices.”

On the commencement of lifting PMS from the Dangote Refinery, Segun said that the NNPC Ltd. was awaiting the September 15th timeline provided by the Refinery.

Segun, who said no right-thinking individual would be comfortable with the current fuel scarcity, added that the NNPC Ltd. has nearly a thousand filling stations nationwide and was collaborating with marketers to “ensure that stations open early, close late, in order to maintain adequate fuel supply to meet the needs of Nigerians.”

He assured Nigerians: “We are also engaging relevant authorities to ensure products diversions are prevented and timely deliveries to all stations are ensured. The scarcity should ease in the next few days as more stations recalibrate and begin operations.”