The Minister of Finance, Kemi Adeosun, on Thursday said Wednesday’s meeting of the Federation Accounts Allocation Committee (FAAC) ended in a deadlock because the revenue remitted by the Nigerian National Petroleum Corporation (NNPC) for sharing was “unacceptably” low.
Members of the committee had dispersed from the auditorium of the finance ministry, venue of the meeting, in despair refusing to share the funds proposed by the NNPC.
Although members of the committee refused to say why they left without sharing the allocation, newsmen overhead a telephone conversation by one of the commissioners who blamed the decision on NNPC’s refusal to remit sufficient revenue to the pool.
But, NNPC denied any wrongdoing, saying the remitted amount was agreed by the governors of the 36 states..
NNPC spokesperson, Ndu Ughamadu, said in a statement sent to newsmen on Thursday the N147 billion revenue remitted to FAAC for sharing to the three tiers of government was “in line with the terms of agreement it had with governors on the matter.”
Mr Ughamadu said the agreement was that the corporation would remit about N112 billion to FAAC every month.
The remittance, he said, was however subject to sufficient funds from its sale of domestic crude oil allocation for the corresponding month after meeting cash call obligations on Joint Venture (JVs), deductions of Premium Motor Spirit (PMS)-cost under recovery and pipeline maintenance.
He said the NNPC surpassed the terms of agreement on monthly remittance for June by N35 billion.
However, while briefing the governors on the deadlock, Mrs Adeosun, who is also the Chairman of the Federation Account Allocation Committee (FAAC), said the revenue brought by NNPC for sharing during the month was lower than expectations.
“We (government) operate NNPC as a business. We have invested public capital in the business and we have expectations of return, and when that return falls lower than our expectations, then the owners of the business (the Federal Government and States), need to act,” Mrs Adeosun said, according to a statement sent by her office.
The minister said FAAC members felt the figures the NNPC proposed for sharing were unacceptable, while some of the costs included in the report could not be justified.
She said it was the decision of members of the revenue sharing committee to go back and reconcile the accounts with the NNPC, rather than approve the accounts.
Mrs Adeosun said both the federal and state governments have agreed to bear the consequences and ensure they get to the bottom of the matter and bring out the accurate figures.
She noted that now that oil price is about $76 per barrel in the spot , Nigeria’s blend of crude oil (Bonny Light) would be about $78 per barrel.
With the crude oil benchmark price in the 2018 budget put at $51 per barrel average, indications are that government would be earning as much as $27 excess revenue from each of the 2.3 million barrels per day production capacity, after deducting 445,000 barrels for local refining.
In line with government’s plan to aggressively grow the excess crude oil revenue account, the minister said government’s intention was to encourage savings in the excess crude account.
“If the federal and state governments cannot get into the Federation Account the sort of revenues they expect from the NNPC, then they will not be able to save,” the minister said.
On what is the expectation from NNPC going forward, the minister said based on the current crude oil price and crude oil quantity, FAAC members have the right to ask questions, if, based on their calculations, the revenue figure the NNPC presents was less.
“We have to understand these figures NNPC is giving before we can accept them. Remember that the FAAC figures have to be formally accepted by the committee. And because we were simply not comfortable with the quantum of some of the deductions made, we could not approve those figures,” she said.
Since Wednesday, the minister said representatives of the Commissioners of Finance Forum, Federal Ministry of Finance, Office of the Accountant General of the Federation, Central Bank of Nigeria have been meeting with the NNPC top management.
She expressed the hope that the reconciliation would be concluded soon to enable FAAC reconvene within next few days.
On balances in the Excess Crude Account, the minister said while the ECA had about $1,92 billion Stabilisation Account has N18.9 billion and Natural Resources Account N133.72 billion.
There are already indications that Nigerian workers could be made to suffer due to FAAC confusion. On Thursday, the Bayelsa State Government warned that June salaries of workers in the state may be delayed until the confusion is sorted out.