Nigerian workers have been subjected to hard times and difficulty in meeting basic family needs for most parts of the month as for about four times, the Federation Account Allocation Committee (FAAC’s) technical session was abruptly adjourned last month (June) on account of Nigerian National Petroleum Corporation (NNPC) failing to make accurate returns to the federation account.
According to Kemi Adeosun, Nigeria’s finance minister, the deadlock was as a result of proposed revenue payments by the state oil company to the government account which were unacceptable because they were less than expected in view of raised crude oil prices and sales.
Adeosun told the National Economic Council (NEC) advisory body that the company’s accounts had not been approved because some costs could not be justified, claiming that government has been short-changed by the NNPC.
NNPC remittance rejected based on the state of global oil price and sales
The minister explained that the government wanted to be saving aggressively into the Excess Crude Account (ECA) especially with oil price at $76 per barrel in the spot market and Bonny Light at about $78 but the figures from NNPC as presented at the FAAC meeting last month (June) was inconsistent with the state of global oil price and sales.
During the FAAC meeting, Adeosun said; “We operate the NNPC as a business. We have invested public capital in that business, and we have expectations of return. And when that return falls lower than our expectations, then the owners of this business, which in this case are the Federal Government and states, need to act.
“So, that was what caused the deadlock and we really felt the figures the NNPC was proposing for FAAC were unacceptable. We felt that some of the costs couldn’t be justified, and so we have decided that rather than approve the accounts, we will go back and do further work,” Adeosun told journalists on Thursday after state government joined their finance commissioners to examine the discrepancies in NNPC’s figures.
Reacting further to the deadlock, the minister said the government needed to act once its expectations from the firm were not met because the NNPC is operating as a business.
“In my capacity as the chairman of FAAC, I briefed governors on the deadlock that we have got currently in the Federation Account and explained what happened. There was quite an extensive debate on what to do.
“Further negotiations and interactions are going on with the NNPC as we speak. However, we did brief both Mr. President and Mr. Vice President on the deadlock and asked for their support and their forbearance in this, because the consequence of this is that salaries might well be delayed in many states as a result of this.
“But we feel that in order to get to the accurate figures that we need, we have asked for forbearance and the governors and the Federal Government are all in agreement that we need to get to the bottom of those figures.
“Based on oil price and oil quantity, you can calculate what you are expecting to see in the Federation Account and if the figure is less, then the right question that any stakeholder must ask is why? So, we have been going back and forth with the NNPC to try and understand these figures before we can accept them,” she added.
Adeosun said FAAC figures have to be formally accepted by the federation account committee but as it is, the government is not comfortable with the quantum of some of the deductions made and, therefore, did not approve the figures presented by the NNPC.
She also informed that an interface was ongoing among the Commissioners of Finance Forum, Ministry of Finance, Office of the Accountant-General, the CBN and the NNPC over the matter.
Governors asking NNPC for additional N40 billion remittance
The NNPC however, in a statement said its 147 billion-naira ($482 million) June remittance to the government account was in line with terms agreed with state governors who made fresh demands.
According to Mr. Ndu Ughamadu, the Group General Manager, Group Public Affairs Division of the NNPC, the Governors are asking the corporation to remit additional N40 billion to the Federation Account Allocation Committee, FAAC.
Ughamadu said the NNPC had earlier agreed with the governors to make a monthly remittance of N112 billion to the FAAC, but the NNPC was able to exceed the amount by N35 billion, bringing its remittance in June 2018 to N147 billion.
The NNPC Group General Manager said the state oil company had to secure the extra funds from amount meant for meeting its Joint Venture cash call obligations and describing the demands of the governors as unfortunate based on the aforementioned move to secure more cash.
VP calls for supporting documents from NNPC over N20 billion underpayment
Following the deadlock between NNPC and the Federation Accounts Allocation Committee (FAAC), Vice President Yemi Osinbajo was asked to wade into the matter.
The lot fell on Osinbajo as the chairman of the National Economic Council to resolve the disagreement.
Immediately, the VP moved to resolve the matter by directing the state oil company to forward all relevant documents on monthly revenue to his office in order to resolve the alleged underpayment to the federation account to the tune of N20 billion.
The House of Representatives has also ordered an investigation into the alleged underpayment of over N100bn to the Federation Account by the NNPC with many hoping that such interventions will have the potential of addressing the fiscal unaccountability that has been bedeviling Nigeria’s public finance for too long.
Similarly, FAAC said it would soon begin to probe alleged shortfall in revenue remittance by the Federal Inland Revenue Service (FIRS).
The commission said it would focus on FIRS after tackling the under remittances issue with the NNPC.
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