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Stakeholders express concerns over FAAC, NNPC face-Off

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Fears are rife that the ongoing face-off between the Nigerian National Petroleum Corporation (NNPC) and the Federation Accounts and Allocation Committee (FAAC), would have grave consequence on the finances of stateS across the country, as they largely really on the Federal Government for funding.
While states are finding it difficult to pay workers’ salaries in recent times, the concern of most stakeholders who spoke to The Guardian is that the situation could escalate in the face of high inflation, especially the rising cost of food items.Last Wednesday’s FAAC meeting ended in deadlock due to disagreements between the NNPC and the committee members over figures.
Though the NNPC claimed it only agreed on a monthly remittance of N112b to the states, stakeholders Are worried that the lack of accountability and transparency, and the persistent mutilation of figures by the national oil firm have become unbearable.However, last night, indication arose that the stand off between FAAC and the NNPC may not end soon until the latter pays into the Federation Account, the correct amount.

Addressing newsmen, yesterday, in Abuja, Chairman, Forum of Finance Commissioners, Mallam Mahmoud Yunusa said, “based on all provable assumption parameters, the Nigerian National Petroleum Corporation (NNPC) is to remit N87.6b being Petroleum Profit Tax (PTT) and N60b as royalty, amounting to N146b to the Federation Account as against N127b paid by the NNPC.” 

Yunusa noted that while the NNPC claimed it spent N3.5b on product leakage, pipeline vandalism, the Department of Petroleum Resources (DPR), an agency which is supposed to keep such record claims ignorance of the amount.He said NNPC remittances to Federation Account is a recurring issue, stating that the current development provides an opportunity to address it holistically. 

“It’s better for us to stand down the FAAC with all the pains involved because some states have not paid salaries and it is a good development to trash this once and for all. In the past nobody dares NNPC, but not now that we have a transparent government in place. What is happening now is not a disagreement per say, but what I can call “progressive disagreement,” said Yunusa.

He said states as stakeholders in the Federation Account are not expected to take NNPC’s account hook, line and sinker, but are allowed by law to ask questions for clarity. And as shareholders and stakeholders interested in the running cost of this public investment, the major issue we are having with the NNPC is discrepancies in the figure. You don’t expect us to accept and adopt whatever amount remitted to FAAC by NNPC. We have to go through it and if we are convinced, then we accept it, but where it is not clear to us, we have to seek proper reconciliation.” 
Only recently, the Nigeria Extractive Industries Transparency Initiative (NEITI) accused NNPC of failing to remit over $16.8b to the Federation Account, which was reportedly paid as dividends by the Nigeria Liquefied Natural Gas (NLNG) Limited,

A political scientist, who heads Abuja-based Civil Society Legislative Advocacy Centre (CISLAC) and Transparency International (Nigeria), Auwal Ibrahim Musa, said the situation would affect the financial crisis currently rocking states, considering that most have no financial options apart from depending on the Federal Government.
“The National Assembly has to step in; it needs to perform its oversight function. NEITI has continued to indict NNPC for impunity in this regard and yet the National Assembly is not giving the reports necessary attention so that there would be compliance and respect for the law,” Musa said.
Musa, who expressed worries that state’s continuous dependence on the Federal Government could cause catastrophe should the Federal Government be confronted with financial predicament, added that the country’s faulty federal system was undermining the growth of the states, particularly in the area of financial autonomy.

The Group General Manager, Group Public Affairs of NNPC, Ndu Ughamadu, said, “The agreement the NNPC has with the governors is that FAAC be given N112b monthly. This, however, will be subject to sufficient funds from sales of domestic crude oil allocation for the corresponding month after meeting cash call obligations on JVs, deductions of PMS cost under recovery and pipeline maintenance. Incidentally, due to the posture of governors, the NNPC was able to raise N147b this month (June) for the governors by taking from the amount meant for settling cash call obligations. Sadly, however, the Governors wanted additional N40b. Unarguably, this is very unfortunate considering that NNPC is exiting the cash call phenomenon.”A leading economist, who chairs the Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, said the face-off between FAAC and NNPC has become recurring because of mutual suspicion.

He expressed concern over continuous allegations of lack of transparency in the financial records of NNPC.“What we are witnessing is a direct consequence of over reliance by states on allocation from the Federation Account. States should evolve initiatives to improve on Internally Generated Revenue. This would reduce the observed over-reliance on the central allocation with the attendant acrimonies and tension that often overshadow the FAAC meetings. Most states cannot survive without the FAAC and their economy is left prostrate anytime there is delay in the arrival of the allocation,” Ajibola stated.

A development economist Dr. Emmanuel Anoliefo, is advocating for the enhancement of transparency and accountability in the management of Nigeria’s oil resources revenue in order to avert the repeated conflicts. Anoliefo said: “The only way to put this suspicion by the states to rest is to make a law that would enable states participate in the monitoring of revenue because the NNPC belongs to the states. The Federal Government is just a part owner of the NNPC. I do not think that there is any foul play any longer in the NNPC because of the many corruption-fighting initiatives, like the whistle blowing policy and the rest. Therefore, there should be no fear about bringing states on board,” the economist stated.

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