US embassy cable - 03ABUJA2086

UNCLAS SECTION 01 OF 02 ABUJA 002086 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: EFIN, ENRG, ETRD, NI 
SUBJECT: NIGERIA: LEGISLATURE PASSES USD 2.038 BILLION 
SUPPLEMENTARY BUDGET 
 
 
1. (U) Summary: On Tuesday, December 2, 2003 the House of 
Representatives (lower legislative chamber) toed the line of 
the Senate (upper legislative chamber) by approving the 
supplementary budget of USD 2.038 billion (Naira 269 billion 
at USD 1=Naira 132). The Senate had earlier passed the budget 
on Wednesday, November 19.  The approved supplementary budget 
contained amendments to President Obasanjo's earlier 
submission of USD 2.112 billion (Naira 278.863 billion).  End 
Summary. 
 
 
Supplementary Budget Proposal Highlights 
----------------------------------------- 
 
 
2. (U) On Thursday, October 9, President Obasanjo presented a 
supplementary budget of USD 2.112 billion to the National 
Assembly.  The budget comprised USD 731 million or 34.6 
percent (Naira 96.575 billion) for recurrent expenditures, 
USD 631 million or 30 percent (Naira 83.287 billion) for 
capital expenditures, and USD 750 million or 35.4 percent 
(Naira 99 billion) for domestic debt service. 
 
 
3. (U) A breakdown of the budget showed that for recurrent 
expenditures, USD 76.7 million (Naira 10.127 billion) was for 
the Office of the National Security Advisor; USD 87.88 
million (Naira 11.6 billion) for military pensions; USD 
37.878 million (Naira 5 billion) for the promised public 
service wage increase; USD 97.72 million (Naira 12.9 billion) 
for payment of electricity and telephone bills incurred by 
government ministries and agencies; USD 56.8 million (Naira 
7.5 billion) for civil service pensions; and USD 64.39 
million (Naira 8.5 billion) for monetization of 
benefits-in-kind to senior civil servants. 
 
 
4. (U) A further breakdown of the capital expenditure account 
showed that USD 189.39 million (Naira 25 billion) was for 
building two additional power stations; USD 56.06 million 
(Naira 7.4 billion) for roads and bridges; USD 75.75 million 
(Naira 10 billion) for debt owed local contractors on capital 
projects; and USD 144.65 million (Naira 19.09 billion) to the 
Ministry of the Federal Capital Territory for infrastructure, 
and renovation of the international airport and completion of 
the Abuja Sofitel Hotel in preparation for the early December 
Commonwealth Heads of Government Meeting (CHOGM). 
 
 
Highlights of the National Assembly Budget 
------------------------------------------ 
 
 
5. (U) The supplementary budget approved by the legislature 
was USD 74.56 million short of the President's USD 2.112 
billion submission.  The National Assembly approved recurrent 
expenditures of USD 614.27 million, capital expenditures of 
USD 673.75 million, and USD 750 million for domestic debt 
service.  NEPA capital projects were reduced by USD 75.75 
million, while the allocation for electricity and telephone 
bills was cut by USD 37.878 million; by contrast, a USD 30.3 
million more than expected was set aside for the police. 
 
 
ANPP Walkout 
------------ 
 
 
6. (U) The debate over the supplementary budget was highly 
contentious, and members of the leading opposition All 
Nigeria Peoples Party (ANPP) staged a walkout to protest what 
it called a "deliberate act of illegality".  Members of the 
ruling party Peoples Democratic Party (PDP), then passed the 
supplementary budget, even though they raised and lowered 
specific figures and reduced the overall supplementary 
somewhat. 
 
 
7. (U) ANPP leader Dr. Ahmed Salik claimed to the press that 
the supplementary budget was illegal and amounted to 
duplication of monies earlier allocated in the original 2003 
budget. For example, Salik said, the USD 75.75 million for 
the office of the National Security Advisor (NSA) had already 
been provided in the original 2003 budget.  He asked why a 
new allocation of the same amount is being provided to the 
same office when an explanation had not been given on how the 
initial allocation was spent. 
 
 
Explanation by Suswan 
--------------------- 
 
 
8. (U) The Appropriation Committee Chairman of the House of 
Representatives, Honorable Gabriel Suswan, also held a press 
briefing after the plenary session to clarify the approved 
supplementary budget.  According to Suswan, most of the 
monies had already been expended on projects that were not 
provided for in the 2003 budget.  Suswan also confirmed that 
members of the ANPP made inputs to the Appropriation 
Committee's streamlining and prioritization of the 
supplementary budget, so he was surprised that they walked 
out during the plenary session.  However, Suswan admitted 
that only 60 percent of the 2003 budget capital expenditures 
had been obligated, while the recurring expenditure account 
had been fully committed (i.e. the capital budget had been 
raided to pay for recurring expenses, and even that pot of 
money had been exhausted). 
 
 
Comment 
------- 
 
 
9. (U) Not only was money spent from the improper account, it 
was spent before it had been budgeted for.  The 2003 
supplementary budget was proposed and approved after most or 
all of the monies for the associated budget line items had 
already been spent.  Nigeria has not had a timely budget in 
three years.  Legally, the Government can spend money on the 
basis of the past fiscal year's budget absent an approved 
budget for the current fiscal year, if the National Assembly 
does not approve a new one. End Comment. 
MEECE