Economy
Subsidy: States poised for showdown, demand petrol consumption records from NNPC
The Federation Account Allocation Committee (FAAC) has asked the Nigerian National Petroleum Company (NNPC) to submit state-by-state consumption of Premium Motor Spirit (PMS), popularly known as petrol, to its ad-hoc committee.
The directive is contained in the FAAC Post Mortem Sub-Committee (PMSC) final report submitted to the whole house at its July 2022 meeting in Abuja
“Consumption of PMS has been a major concern to members and it was raised severally at the FAAC plenary.
“Therefore, in order to ascertain the consumption, the Sub-Committee also requested the relevant Agencies to submit the state by state consumption of PMS in the country for the year 2021,” the members stated.
A source at the meeeting revealed that state commissioners of finance who are statutory representatives of states governments in the committee, forcefully demanded to know how much fuel each state and local every month before the sharing of the revenue generated the previous month could start.
Their insistence, it was learnt, disrusped the meeting and almost brought it to an end before the minister of finance intervened, begging the states finance commissioners to give the corporation time to prepare the report.
“An ad-hoc committee was later set up to examine state by state consumption of PMS because of continuous deduction of the shortfall from the Federation Account; scrutinise Value Shortfalls (subsidy) deductions, and make appropriate recommendations to the FAAC Post Mortem Sub-Committee.
”The state governments have had enough of NNPC’s shenanigans and arrogance in its handling of revenue meant for the Federation Account”, the source stated.
In June, the NNPC was asked to furnish stakeholders with details of the Sinking Fund Account it opened and to pay interest accruable on the amount withheld in respect of Miscellaneous, Gas, Ullage, Osubi and WHT inflows from 2014 to 2021 (if any).
The ad-hoc committee set up to work with the NNPC demanded to know from the corporation why it kept revenue due to the Federation Account in a Sinking Fund Account for five years (2016- 2021).
In its response, the NNPC said: “In 2015, Mr. President approved the utilisation of dividend stream and all recovered outstanding legacy debt from the operations of AFAM IV and Okpai JV Independent Power Projects (IPPs) by NNPC Gas and Power Investment Company (NGPIC) for funding of future investments in other power projects.
“In 2016 She’ll Petroleum Development Company (SPDC) was advised with NNPC’s Sinking Fund Account pending the incorporation of NGPIC.”
The NNPC added that “all Proceeds from AFAM IV IPP being operated by SPDC were paid into this account in bulk.
“In the 2019 NEITI Audit exercise, it was realised that the proceeds received from AFAM IPP include other streams of revenue belonging to the Federation. After the Audit exercise, NNPC liaised and agreed with SPDC to segregate all payments made from 2016 into various streams.”
In 2020, NNPC said it “secured management approval and transferred what belonged to Federation Account.
NNPC advised SPDC to route all proceeds accruable to the Federation to the Oil and Gas Revenue Account with CBN while Power sales proceeds go into the NGPIC’s Account”.
It was also disclosed that “the National Economic Council (NEC) reviewed the impact of terminated Strategic Alliance Agreement entered into by Nigeria Petroleum Development Company (NPDC) in 2011 and 2013”.
The 36 states governments, it would be recalled, have been having a running with the NNPC over the its unilateral deduction of funds from the federation account to pay fuel subsidy.
The corporation has not also remitted a kobo into the federation account since the beginning of this year.
The company had repeatedly informed the committee that it cannot make the expected remittances because it spends all its revenue funding subsidy.
