You are here
Home > HEADLINES > Resolving the FAAC Stalemate

Resolving the FAAC Stalemate

Resolving the FAAC Stalemate

Please follow and like us:

  • 0
  • Share

For several weeks now there has been an ugly stalemate between the Federation Account Allocation Committee [FAAC] and the Nigeria National Petroleum Corporation [NNPC] over what the former said are irregularities in the latter’s management of the country’s oil revenue. Several meetings intended to resolve the stalemate were futile, said to be due to NNPC’s failure to account for funds collected by it to FAAC’s satisfaction. The situation, which arose due to FAAC’s loss of confidence in NNPC, has degenerated to a level where most state governments who depend on the monthly federation account allocations for their sustenance have become insolvent and are unable to pay workers’ salaries or to carry out other regular tasks.

Trouble started in June when FAAC, in a stand-off with NNPC, openly accused the latter of shortchanging the federation account by as much as N90 billion. Chairman of the Forum of Finance Commissioners Mallam Mahmoud Yunusa said at a press conference that NNPC was to remit a total of N147 billion to the federation account for the month of May 2018. He said this comprised Petroleum Profit Tax [PPT] of N87.6 billion and royalties of N60 billion, instead of the N127 billion it remitted, aside from other revenues accruable from domestic crude sales. Yunusa further picked holes in the claim by NNPC that it spent N3.5 billion on product leakage and pipeline vandalism, as the Department of Petroleum Resources (DPR) which should keep such records distanced itself from the NNPC claim.

In the light of the perceived integrity deficit in the operations of NNPC, Yunusa said plans were underway to strengthen the system by stripping NNPC of powers and the function of collecting oil royalty and transfer same to the Department of Petroleum Resources (DPR) while the Federal Inland Revenue Service (FIRS) handles Petroleum Profit Tax (PPT) in line with the law. Besides, FAAC also began a probe the circumstances associated with the revenue shortfall, which Yunusa said has been perennial.

This conflict and welter of allegations is unfortunate and also serious because it portrays NNPC as an agency that is yet fall in line with the principles of accountability and probity which the Buhari administration places high premium on. FAAC’s allegations also portray NNPC as unmindful of the imperative of reconciling its operations with the Treasury Single Account (TSA), whose primary intention was precisely to address the kind of very ugly situation now being alleged against the country’s most important government agency.

An inexplicable shortfall in national revenue should have been a thing of the past with the coming of TSA. Besides, NNPC is operating under the direct supervision of President Muhamadu Buhari, who is the country’s Petroleum Minister. Nigerians are therefore shocked and awed that an agency that the president placed under his own direct supervision should be in the line of fire of such serious allegations.

Nevertheless, as Mahmoud Yunusa has put it, the problem of shortfall in NNPC account of the country’s revenue is not a new situation but has been frequent in the past. That is largely because it performs too many functions all at once, some of them statutory, others imposed on it by policies of incumbent governments which are not necessarily appropriate. For example, government has tasked NNPC with importation of fuel, diesel and kerosene, which it is also forced by government policy to sell at a subsidized rate and deduct the money from its collections before it remits to the federation account. This is an arrangement worse than dedicating funds to pay fuel subsidy.

Pending its unbundling when the PIB laws are passed, the hint of stripping NNPC of the duty of revenue collection deserves consideration. Similarly, a situation where the failure to disburse FAAC allocation for only one month makes as many as 14 states unable to pay salaries also requires serious examination. Right now however, the onus lies on President Buhari to resolve this impasse between FAAC and NNPC before it torpedoes our coming out of economic recession.

Facebook Comments

Please follow and like us:

  • 0
  • Share

Leave a Reply

Top