- As FEC collapses domestic debt refinancing into $3bn treasury bills
The Senate on Wednesday cautioned every doubting Thomas still disbelieving the appropriateness of the ongoing probe into an alleged N30 trillion revenue leakage in the country’s import and export value chain, between 2006 and 2017 to hold on just a little bit more, because some of the affected firms have begun to make “confessions”.
Stressing that the probe was not a charade as perceived by some Nigerians, the Chairman, Senate Joint Committee on Customs, Excise and Tariff and Marine Transport, Sen. Hope Uzodinma presiding over the probe has subsequently warned that no amount of blackmail would deter the committee from carrying out its constitutional role, particularly as the issues under investigation have direct impact on Nigerians.
Addressing newsmen in Abuja, Uzodinma assured Nigerians of the committees determination to unmask and recover unbelievably lost sums of monies, which currently were still hidden with some firms.
“If there is anybody who is still in doubt whether there are recoverable revenues of government in the hands of these companies, by the admission of some of them, it means that the person should better wake up.
“We call on all Nigerians to support the Senate. We are all very serious men and women.
“We are professionals in different fields of endeavour and when we have decided to come here to serve the country, we mean every word of it.
“What we are doing and showing by this investigation is that the country can be better and that we can move from where we are now to where we expect the country to be,’’ he stated, dismissing the insinuations that the committee’s investigation was shrouded in secrecy, as being totally unfounded.
He, however, said that the committee was being careful in disclosing some details as the investigation was still ongoing, and that making the details public now may jeopardise the process.
“We are not shrouding anything in secrecy. The public is interested in this investigation and you know the Stock Exchange is an important platform for trade in Nigeria.
“We don’t want to create unnecessary panic in the market as some of the companies are public-quoted. There is a signal we will let to the market that will destroy the image and integrity of these companies.
“We have not arrived at any conclusion because the investigation is still on. On the final day, we will do a full blown news briefing so that Nigeria will know the outcome of our exercise,’’ he said, saying that of the over 60 companies being investigated, the committee had met with only 11.
He maintained that in the new phase, the committee was meeting with each of the firms at a time and would continue in that manner until they were exhausted.
“Some of the companies approached the committee and expressed their willingness to support our investigation because the process of the investigation may require them revealing some of their trade secrets.
“In order not to breach the secrecy that has to do with their business modules, we agreed to their terms because our interest is to achieve result.
“Some of the companies that appeared before us today have also committed to our success by way of making some admissions here and there’’, the chairman said further, positing that the committee would carry out the mandate given to it by helping government to recover some of the funds as well as block leakages, moving forward.
Uzodinma highlighted that though the efforts of the lawmakers were not being appreciated, they would continue to make the sacrifice to take the country to where it ought to be; and commended the Police for swinging into action when a warrant for arrest of absconding firms was issued, as the action forced the firms to appear before the committee.
Uzodinma called on the media to also support the course of the National Assembly.
The companies that met with the committee on Wednesday were Dana Group, China Export, Emel Group, Halliburton, Bhojson Plc, Bharat Ventures Ltd, Bua International Ltd, Friesland Campina, Boulos Group, CFAO Group and British American Tobacco Company.
In the meantime, sequel to a memo presentation by the Minister of Finance, the Federal Executive Council (FEC) on Wednesday approved the refinancing of the country’s domestic debts into treasury bills worth three billion dollars, as part of a broad based Government strategy to reduce the cost of borrowing.
The Minister of Finance, Mrs Kemi Adeosun, gave indicated this while addressing State House Correspondents on the FEC meeting presided over by Acting President Yemi Osinbajo. The approval, according to the Minister, was derived from a memo her ministry presented to FEC to enable the Federal Government restructure its debt portfolio.
“The memo that I presented and was approved by council was part of our efforts to restructure our debt portfolio.
“We got approval in June that we would restructure our debt profile; we would borrow less in Naira and more in foreign currency because it is cheaper and also because we want to prevent crowding out the private sector.
“We want to create room for the private sector to be able to borrow so they can grow and create jobs. So as part of that, we sought approval and that was granted for us to refinance treasury bills.
“As treasury bills mature we will be refinancing them into dollars. Up to $3 billion worth of treasury bills will be refinanced into dollars.
“As the Naira treasury bills mature, we will be issuing dollar instruments. So we are not increasing our borrowings; we simply are restructuring instead of borrowing Naira we are bearing dollars”, she explained, noting that the measure had the advantage of reducing cost of borrowing.
She also noted the average right that the nation borrowed internationally did not exceed seven per cent, whereas in the treasury bills, it was between 13.6 per cent and 18.5 per cent.
Adeosun said the country was almost reducing by half the cost of borrowing which was trying to relieve the pressure on debt service.
She recalled the controversy that the debt service of the country was very high, adding that the refinancing was to relieve the debt service.
She also said that by the measure, government would be extending the maturity profile of the debt.
According to her, the country’s treasury bills mature in maximum of 364 days while the borrowing will be taken out to up to three years.
She said that the expectation was that when the economy recovered, the country would be in a much better position to repay instead of just rolling over the debt as was being done at the moment.
The minister said that reducing government borrowing by $3 billion would create more rooms for banks to lend to the private sector.
“Hopefully that will also create some downward pressure on interest rates.
“We won’t be borrowing as much in Nigeria and hopefully that will also begin to put pressure on interest rate which we all agree has to come down,’’ she added.
Adeosun explained that the government would not issue dollar denominated treasury bills but to issue bonds in the international capital market for the matured naira denominated treasury bills.
“Our actual cost of borrowing is actually below seven per cent while the Treasury Bills we are paying up to 18 per cent.
“What we are simply doing is substituting the maturing naira debts with cheaper dollar denominated bills.
“On the impact on the naira, it is actually positive because what it means is effectively $3 billion will be coming in to our foreign reserves,’’ the minister stated.
Also, the Minister of Budget and National Planning, Mr Udoma Udo Udoma, said FEC approved the Medium Term Expenditure Framework (MTEF) 2017 to 2020 and fiscal strategy paper.
Udoma said in the past weeks, government was having consultations with the governors, public and members of the National Assembly on MTEF.
He said the highlight of the approval was that the government was committed to achieving a seven per cent growth rate by the end of the three-year plan in accordance with the economic recovery and growth plan.
Udoma said that the trajectory of getting to seven percent was that the target for 2018 would be 3.5 per cent growth rate, 4.5 per cent in 2019 and 7 per cent in 2020.
He said there was a projection of 2.3 million barrels per day of oil production for 2018 made up of 1.8 million barrels per day (bpd) with regular crude and 500,000 bpd of condensate and crude oil price projection of $45 dollars.
“We are also committed in the MTEF FSP to explore ways of raising additional revenues to reduce the debt service to revenue ratio.
“It is part of the policy of this government to make sure that out borrowing is controlled and to keep a reasonable debt service to revenue ratio which will help to bring down interest rate,’’ he explained.