Obasanjo Replies HOR on HR22


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Obasanjo Replies the House Of Representatives



The Executive arm of government has received a copy of Resolution
No.HR 22 dated Tuesday , 13th August 2002 which was forwarded through
the Secretary to the Government of the Federation.

The Executive is reliably informed that the resolution lacks
procedural merit as the House was not properly reconvened as provided
by Rule 13(3) of the House. Knowing the selfish and self-seeking
motive of some members which formed the background to the resolution
passed by the irregularly reconvened House, and in view of the
frivolous unconstitutional and unsubstantiated nature of the
allegations, the Executive would have ignored the resolution.

However, as democrats, the Federal Executive believes that all of us
should learn the right lessons from every aspect of the practice of
our democracy so that we can improve as we go along. While mistakes
are inevitable, we may in the process learn to make corrections. For
these reasons, the Federal Executive considers it appropriate to give
full explanations in rebuttal of every aspect of the resolution to
the Nigerian people who have stood firmly in defence of democracy,
good governance, stability and integrity of the Nigerian nation.

Item 1 , Non implementation of Budgets for 1999, 2000 and 2001

Comments A budget is an indicative plan and may be implemented to the
extent that the parameters encapsulated therein are realised.
Recurrent expenditure of a budget, particularly personnel cost, is a
first charge. The surplus arising thereafter, if any, is dedicated to
the capital programme. Capital expenditure is a function and product
of recurrent surplus from the Consolidated Revenue Fund Account. If
there is no sufficient surplus after meeting recurrent obligations,
capital projects will be difficult to fund.

Based on available revenue the budget for years 1999, 2000 and 2001
were correspondingly implemented. In fact, in the years 1999, 2000
and 2001 there were in-built deficit items which were not realised
even though the core revenue i.e. revenue from oil and non-oil
sources, was surpassed. Consequently, total revenue fell short of
expectation as indicated in the figures below:








(Naira, Billion)

(Naira, Billion)

(Naira, Billion)

(Naira, Billion)

Total Expenditure (Budgeted)





Total Revenue (Actual)










*Prorated January-July

Thus, the actual revenue had always been below the budgeted

In the light of the foregoing, the Federal Expenditure is surprised
that this issue should be raised again after having been raised by
the Senate in a similar resolution to which a detailed and
satisfactory response was given.

Item 2 , Non-implementation of Capital aspect of 2002 Budget

Comment The Year 2002 Budget also has inbuilt deficit financing items
expected to be funded by proceeds from the privatization of NITEL
(projected to be in the region of US$1.3billion) and recovery of loot
from the Abacha family (expected to be in the region of US$1.2
billion). It is common knowledge that these proceeds had not yet been
realised. In addtion, the nation's oil quota had been cut by about
400,000 barrels a day from our previous level of 2.00million barrels
per day to 1.788 million barrels a day. The year 2000 Budget was
predicated on a production quota of 2.1 million barrels a day as
against 1.788 million barrels a day now being produced.

While it is true that the international price of crude oil has
averaged US$25 per barrel as against the US 18 dollars per barrel on
which the 2002 budget was predicated, the average price of a basket
of the different grades of oil produced by Nigeria has hovered around
US$20.68. This coupled with the reduced production quota has
inevitably led to a significant shortfall in oil revenue. This
notwithstanding, as at the first week of August 2002 over 120 billion
Naira, representing about 25% of the entire Capital Budget, has been
released for various Capital projects as indicated below:

Agriculture: N2.5 billion, with N1 billion for procurement of
fertilizers for the 2002/2003 planting seasons, while N1.5 billion
was released to the Nigeria Agricultural Co-operative and Rural
Development Bank.

Science and Technology: N4.3 billion to finance Biotechnology, space
research and development, information Technology as well as Science
Equipment development projects as approved in the 2002 Budget.

Works and Housing: N30.39 billion was released to various roads
projects across the nation.

INEC: N7.39 billion was released being INEC's 2002 budgetary
allocation: Electoral Budget.

Labour and Productivity: N1.068 billion was released for Labour Mass

Defence: Over N0.5 billion was released for barracks rehabilitation.

Industry: N1.25 billion to the Bank of Industry.

Power and Steel: N10 billion was released to fund various NEPA
projects: generation, transmission and distribution.

Health: N0.840 billion for vaccines.

Item 3 , Unilateral Review of 2002 Budget By Executive

Comment   Shortly after the 2002 Appropriation Act was passed, it
became apparent that the revenue projections that underpinned it were
unrealistic. The President immediately took the initiative of
inviting the leadership of the National Assembly to a member at the
Presidential Villa on 4th June 2002 to brief them on the implications
of the revenue shortfalls as well as the Supreme Court judgment on
the 2002 Appropriations. They were also informed of the need to re-
prioritize the Budget in the face of the dwindling revenue.

Subsequently, on 16th June, 2002 the President met with a delegation
of nine Senator led by the Senate President, including the Chairmen
of Senate Committees on Appropriations and Public Accounts,
respectively, during which detailed responses were given to the
charges of the Senate Public Accounts Committee on non-implementation
of Budgets since 1999. Among other things, the Senate delegation was
informed that there had been a significant shortfall in the revenue
profile of the Budget, notably the unrealised US$1.3 billion and
US$1.2 billion as a result of the botched family, respectively. At
that meeting, it was agreed that a Joint Executive/Legislative
Committee of twelve persons, six from each Arm, should be set up
under the Chairmanship of the Vice President to review and re-
prioritise the 2002 Appropriations in the light of the changing
revenue profile.

This was immediately followed up with a formal communication to the
leadership of each Chamber of the National Assembly requesting them
to forward the names of their respective nominees to the Joint
Committee. Instead of doing this as previously agreed, they declined
to send their representatives to join those of the Executive on the
Committee. The Executive, therefore, had no option but to proceed
with the re-prioritisation exercise. The National Assembly was
notified of the outcome of the exercise on 10th August 2002 as well
the President's intention to send a Supplementary Bill to the
National Assembly for some exceptional programmes and projects,
inadvertently deleted in the 2002 Appropriations.

It should be stressed that the re-prioritisation exercise was limited
to only re-ordering the projects and programmes already included and
approved in the 2002 Appropriation Act, within the resources
available to implement the Budget. It did not involve adding new
expenditure to the already approved Budget and, therefore, the
Executive did not deem it necessary to send a fresh Bill to the
National Assembly. It was for this reason that the National Assembly
was notified of the Executive's intention to send a Supplementary
Appropriation Bill for those exceptional items inadvertently deleted
in the 2002 main Appropriations. These actions cannot, therefore, by
any stretch of the imagination, be said to be a usurpation of the
Constitutional functions of the National Assembly.

Item 4 , Executive Order on 7.5% Special Funds

Comment Sequel to the Supreme Court judgment on the onshore/offshore
suit, the Executive wasted no time in taking measures to clarify
aspects of the judgment by setting up a Committee chaired by the
Attorney-General and Minister of Justice to examine the implications
of the judgment and to advise the President on its implications
particularly on the 2002 Budget. Upon the submission of the
Committee's report, it became obvious that the judgment had far-
reaching implications for all tiers of government particularly some
of the littoral states, and that something needed to be done urgently
to avoid the grounding of the machinery of government.

Consequently, another Committee under the chairmanship of the
Minister of Works and Housing was set up to examine the implications
of the judgment on the derivations principle of revenue allocation
and to recommend politician solutions to the problems arising from
implementing the judgment as it affected this principle.

As a result of these steps, the President signed an Order on 8th May
2002, pursuant to Section 315 (2) of the 1999 Constitution by which
the inconsistent provisions of the existing revenue allocation Act
were amended to bring it into conformity with the Constitution and
the Supreme Court judgment. One of the objectives of this pragmatic
and interim measure was to calm the political system, which stood the
risk of being over-heated as a result of the fallout from the

It would be recalled that the judgment had, among other things,
declared unconstitutional certain first line charges on the
Federation Accounts as well as the allocation to what was then known
as Special Funds from the same account. Under the latter, provision
was made for funding the FCT, Ecological Fund, Stabilisation Account
and the Development of the Mineral Producing Areas. The Special Funds
also allocated 1% to the derivation principle as against the minimum
of 13% stipulated in the constitution. The judgment declared all
these unconstitutional and stated that these anomalies could only be
remedied either by a new revenue allocation law or an order by the
appropriation authority, i.e. the president, modifying the existing
law in order to bring the existing revenue allocation law into
conformity with the 1999 Constitution.

The Order gave legal backing to the allocation of 13% of the revenue
accruing to the Federation Account to the derivation fund, stopped in
compliance with the Supreme Court judgment. It also re-distributed
the 7.5% Special Funds to the same services for which they were
originally devoted without the Federal Government taking any share of
it. This has recently been further modified, following additional
consultations, in order to give a little more to all the three tiers
of government.

The Order was, therefore, not designed to provide a permanent
solution to, or be a replacement for, a new Revenue Allocation Law
but merely an interim measure aimed at bringing those aspects of the
existing law declared to be inconsistent with the Constitution into
conformity with the Constitution as determined by the apex court. It
would be recalled that even before the Supreme Court judgment, the
Executive had forwarded a Bill to the National Assembly for a new
Revenue Allocation Law, on the advice of the Revenue Mobilization
Allocation and Fiscal Commission. The Bill was yet to be acted on by
the National Assembly before the Supreme Court pronounced the
judgment on the onshore/offshore suite, which then rendered the Bill

It must be emphasized that the action the President took in signing
the Order was done in absolute good faith and necessitated by the
exigencies of the situation at hand, and not an attempt to usurp the
powers of the National Assembly by amending the existing revenue
allocation law. There were consultations with the States.

Item 5 , Extra Budgetary Expenditure on Certain Projects and Rampant
Overseas Trips by Mr. President That Are Unbudgeted for

Comment Releases are made against corresponding projects in the
Appropriation Act, and clearly spelt out in the breakdown.
Expenditures on the National Stadium Projects, the National Identity
Card and Purchase of vehicles by the Nigeria Police have been duly
covered by Appropriations. For examples, N250 million was approved
for purchase of vehicles for the Police in year 2002, while N13
billion was appropriated for the National Stadium out of which N8
billion had been advanced already leaving a balance of N5 billion.
No fund had been released for purchase of 1,150 vehicles for the
Police, nor $13 million to the Ghana Police Force. The CBN and OAGF
and the Auditor-General of the Federation can confirm this position.

It is not true that the President, C-in-C has been undertaking
rampant overseas trips in excess of budgetary provisions for such
trips, as all the trips undertaken so far have been financed within
approved Appropriations. Out of a total of 113 trips undertaken by
the President from 1999 to date, sixty-eight (68) of them were one-
day return trips which did not attract payment of entitlements
whatsoever to either Mr. President or members of his entourage. In
fact, it is disservice to characterize these trips as rampant as they
were all undertaken in pursuit of the national interest, often at
enormous personal inconvenience to the President who had, on many
occasions, to leave the country at the wee hours of the morning only
to return early or late evening of the same day.

Most of the other trips were necessitated by the President's
international commitment both as Nigeria's leader and an African
Statesman, notably commitments arising from his Chairmanship of the G-
77, Presidency of the South Summit and Chairmanship of the Heads of
State Implementation Committee of the New Partnership for Africa's
Development (NEPAD). The benefit of those trips are there for all to
see as Nigeria has been fully re-integrated into the comity of
nations, substantial amount of foreign investments have been
attracted to the country, notably, in the oil and gas
telecommunications, agricultural and industrial sectors. As a mark of
Nigeria's changed international profile, forty-five foreign Head of
State or Governments (including those of five G.8 countries) have
visited Nigeria since the inception of the Administration, while the
nation has been approached to host major international conferences
and events.

Item 6 , Depreciation of the Exchange Rate of the Naira due to lack
of Economic Blue Print

Comment The Federal Executive is surprised by the fact that the House
has failed to recognize the unprecedented changes which the Nigeria
economy has undergone since 1985. It is most unrealistic to expect
immediate recovery within just a space of 3 years, especially in the
face of exogenous happenings that the country has no control over.
The value of the Naira has fallen over the 3 years of this
Administration but this decline in value took place in spite of the
sustained efforts of the Government to protect the value of the
national currency. A different Government under the same condition
might not have been able to hold the value of the Naira at the
current value. In fact, looking at the comparative statistics, the
period June 1999 to date witnessed the greatest stability in the
value of the Naira. In the 13 years between August 1985 and May 1999,
the value of the Naira declined from about N2.00 to the US Dollar (in
1985/1986) to about N94.00 to the US Dollar (in early May, 1999)
compared with a devaluation from N96 to the US Dollar in May 1999 to
N126 in July 2002. For purposes of comparison the exchange rate of
the Ghanaian Cedi moved from 3,499 to US$1.00 in December 1999 to
6,900 to US$1.000 in December 2000 and 7,068 to US$1.00 in December
2001. Similarly, the South African Rand moved from 6.12 to the
US$1.00 in 1999 to 7.55 to US$1.00 in 2000 and then to 12.00 to US$1
in December 2001.

It is equally surprising that the House of Representatives is not
aware that an economic blueprint covering the period 1999 to 2003 has
been in existence since 8th December, 1999.

Item 7 , Rising Inflation Rate and hardship on Nigerian Masses

Comments The level of inflation which is the rate of change in the
general price level shown by the moving average of composite consumer
price index in December of each year was 6.6% and 6.9% in 1999 and
2000 respectively. It increased precipitously to 19.6% in 2001
because of the sharp increase in food price index. Food inflation
which galloped last year had begun a deceleration this year rising to
just 10.3% in June 2002. Food prices increased last year due to
various competing uses. Cassava (Gari), for example was being
demanded for various domestic and international use. Thus, price
increase has since abated and if the present declining trend is
sustained, the level of inflation in December 2002 will be about 12%.
It should however be noted that even though inflation is slowing,
this does not suggest that prices are going down. It merely means
that the rate of price increases has slowed.

The claim by the House of Representatives that inflation rate has
continued to rise from 9% in 1999 to 19% in 2002 is not correct.
Inflation rate was 6.6% in December 199 and it rose to 16.4% in June
2002. The level of inflation is now on a downward trend and it is
intended to attain a single digit level of inflation next year. The
number of employed people today is higher than before May 1999 and
the income of the employed is much higher than before May 1999;
therefore the number of people who are better off has improved on the
pre-May 1999 number.

Industrial capacity utilization which was about 25% before May, 1999
rose to 34.60% during the second half of 1999, increasing rapidly to
40.2% and 42% in 2000 and 2001 respectively. It currently averages
55% reflecting the jump in power generation in Nigeria from less than
1,4000mgw in 1999 to 4,200mgw in 2002. In fact, capacity utilization
is over 90% in the food and beverages industry. While the textile
industry is yet to make an appreciable improvement, steps are being
taken to enhance production. The foregoing scenario means that
industries are kept busier. The real growth in agriculture in 2001 is
5.9% and growth in GDP 4.2% reflect the positive development in
increased power generation and industrial capacity utilization. If
the House had passed the amendment bill that will make Nigeria
benefit from the American-African Growth and Opportunity Act (AGOA),
we may have inched more on our economic growth. That bill has been
with the lawmakers for more than one year.

Item 8 , Inability to redress insecurity, lawlessness, communal
clashes and armed robbery

Comment It is common knowledge that since the inception of this
administration, the issue of security has been accorded topmost
priority. Among other measures, an early decision was taken to
recruit 40,000 policemen per annum for a period of 4 years. That
programme is being faithfully implemented. The Nigeria police has
been re-kitted, reorganized and is being re-orientated. President
retreats on security and conflict resolution were organized both in
Abuja and Jos. Despite the invitation extended to them, the
leadership of the House of Representatives failed to participated.
Following this, a presidential panel on national security was
constituted and is currently finding lasting solutions to the
problems of insecurity. It is therefore surprising that the House of
Representatives has failed to appreciate these measures and, in a
contradictory twist, has turned round in the same resolution to blame
the Executive for trying to acquire vehicles for the Nigeria Police
which are essential for the maintenance of security.

Item 9 , Lack of Capacity to Manage the Security Concerns of the

Comment The upsurge in the incidence of communal clashes may also not
be unconnected with the emergence of the democratic dispensation with
its associated freedoms which have emboldened people, hitherto unable
to express their pent-up emotions, to give vent to these. While this
is to be expected, some unpatriotic people may well be cashing in on
this situation in pursuit of their narrow interests. No government
would allow the pursuit of the parochial ambition of such people at
the expense on the lives of the citizenry and the larger interest of
the society. How useful it would have been for the House of
Representatives to set aside three days to conduct an in-depth debate
on the security situation in the country as a positive input to the
efforts of the Executive!

Item 10 , Non-Payment of the Salaries of Public Sector Workers

Comment Recurrent budget has always been regarded as a first charge
against the Consolidated Revenue Fund. In particular, all established
personnel costs are fully paid in respect of civil servants, both in
Nigeria and Foreign Service personnel overseas. The only time there
was a delay in the payment of salary was in July 2002 when the
Federation Account Allocation Committee could not reach agreement in
time due to the fall out from the Supreme Court judgment. As at 20th
August 2002, all July salaries and allowances for all Federal staff
and officials have been paid and August salaries have started to be

Item 11 , Non-Payment of Staff Salaries in the Judicial Arms of

Prior to the Supreme Court judgment on the onshore/offshore
suit the recurrent expenditure of the Judicial was financed as a
first line charge in the Federation Account. However, the Supreme
Court declared this action unconstitutional on the ground that the
1999 Constitution stipulated that the recurrent expenditure of the
Judicial should be a charge on the Consolidated Revenue Fund as
against a first line charge on the Federation Account. However, the
sum of N10.566 billion has been released to the Judiciary between
April and July 2002.

Item 12 , Delayed Released of Funds to State Governments and
Deduction of Debt Service Obligations At Source

The delay in the release of allocation of States from the
Federation Account occurred only in July 2002 due to the disputed
arising from the fallout of the Supreme Court judgment. The dispute
has since been resolved and State Governments have collected their
share form the Federation Account.

With regard to the charge about deduction of debt servicing
obligations at source, it would be recalled that following the
Supreme Court pronouncement that declared all settlement of external
debts from the Federation Account as a first line charge was
unconstitutional, it was unanimously agreed by all the stakeholders
that each government will bear the cost of the debt from its
resources. However, the issue at stake was that of proper
reconciliation of the debt with the Debt Management Office.

Consequently, deduction from the allocation of each government, in
respect of the external debts, was suspended from April till July
2002 when only one monthly installment was unanimously agreed at the
FAAC meeting to be deducted with effect from July Allocation.
Therefore, no act of illegality has been committed: each State paying
its debt, and Federal government paying its own, is in consonance
with the Constitution.

Item 13 , Arrest and Arraignment of NLC President

The arrest of NLC President and his arraignment were
effected by the police pursuant to their legitimate functions in
which the government does not interfere. It is gratifying to observe
the maturity and patriotism of the NLC President who in spite of
raising his voice legitimately to protest and defend what he
perceives as the interest of workers, knows that when those elected
to preserve and defend democracy become destroyers of democracy and
interest of the nation, he should stand up firmly to condemn
unpatriotic behaviour.

Item 14 , Running NNPC As A Private Enterprise By Mr. President

The Executive finds this allegation incomprehensible, callous
and mischievous. The NNPC is a body set up by law with a board and
currently overseeing its affairs while the day-to-day running is done
by a management team headed by Group Managing Director. It is
therefore strange to allege that it is being run as a private
enterprise of Mr. President.

On the alleged cloudy nature of the NNPC, a discerning observer would
not failed to notice the significant changes in the new NNPC. The
corporation is run with absolute transparency, accountability and

For the first time in many years the corporation publishes without
fail a quarterly report on its accounts and operations for public
consumption. Copies of these reports are regularly sent to relevant
committees of the National Assembly by the NNPC.

The improved efficiency and performance of the NNPC can be seen from,
among other things:

a. Availability of petroleum products nation-wide
resulting in complete disappearance of queue which were prevalent
before the emergency of this administration.

b. Complete turn-around maintenance of all the nation's refineries
which are now producing petroleum products.

c. NNPC's ability to pay Joint Venture Cash Calls as and when due,
resulting in an increase in the nation's proven oil reserves as a
result more aggressive exploration activities.

d. Greater transparency on the part of the Joint Venture operators.

e. The adoption of the open competitive tender system for the
allocation of new oil blocks and the importation of petroleum

f. The drastic reduction in the vandalisation of pipelines and other
facilities and installations.

g. Increase in oil block auctioning

h. Policy on marginal fields

i. Revocation of oil blocks fraudulently allocated e.g. oil block No.

j. Crude oil reserve increased from 25 billion barrels to 30 billion

k. Production capacity increased from 2.4mb/d to 2.8mb/d.

Item 15 , Alleged Use of CBN As an Institution for committing All
Sorts of Fraud and Illegalities

This allegation is vague as it is not specifically directed
against any functionary or institution in the Executive arm. Such a
wild allegation does not connote responsibility. It is also
indicative of the lengths they can go to impugn the reputation of the
apex financial institution without minding the negative effect this
would have on the local and international investing community
interested in our economy. It is not only irresponsible but also
grossly unpatriotic.

In conclusion, the advice for the President, C-in-C to resign is
vexatious, malicious, mischievous, uncalled for, unconstitutional and
therefore rejected outright as it was done in bad faith.

Without doubt, the work of governing this country would have been
easier and we would have made more progress, if the House will
seriously and painstakingly devote itself to the task of law making
rather than money making whether by fair or foul means. It is
instructive to note that the Executive has over the past three years
initiated and submitted 97 bill to the National Assembly for passage
into Law. The fact is that only a paltry 20 of these bills, mostly
Appropriation Bills have been enacted by our Lawmakers to hasten
action on the numerous non-Appropriation but extremely critical bill
demanding their attention.

We will, therefore, appeal to all patriotic and well-meaning members
of the House of Representatives to join hands with the President and
the Executive arm of government to continue to move our country
forward with confidence, in unity and to continue to nurture our
nascent democracy, for the stability, progress and prosperity of our

Africa is looking up to us; the world is watching; we cannot afford
to disappoint ourselves; to shatter the hope of Africa in Nigeria and
confirm the view of the skeptics that nothing good can come out of
Black Africa.

The President and C-in-C wishes to assure the nation that he is
committed to upholding the Constitution in consonance with his oath
of office. He is also committed to treating every branch of
government with fairness and respect. He therefore calls on
functionaries in all branches of government to rededicated themselves
to greater cooperation in order to strengthen our nascent democracy,
improve our economy and ensure the welfare of all Nigerians.

The President and Commander-in-Chief has the vision of a new nation
with hope with a new mission and with a new destiny. He has the
vision of a land unity, dynamism, love, righteousness, opportunity
and prosperity , a model within the comity of nations

AUGUST 22, 2002

Read The Impeachment Resolution HR22 by the House of Representative.



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