Tougher times as remittances to Federation Account drop
Doosuur Iwambe, Abuja
Federal, state and local governments face rougher times from next month as allocations into the Federation Account are expected to drop.
This development is as a result of the huge payment by the Nigerian National Petroleum Corporation (NNPC) on fuel subsidy.
A recent NNPC report had revealed its plans to deduct at least N126 billion from its remittance to the Federation Account at the next meeting scheduled for June, amid rising subsidy payments.
The report signed by Bello Abdullahi, on behalf of the NNPC’s Chief Financial Officer, noted that subsequently, it will begin the subtraction of the balance of an additional N50 billion, being Joint Venture (JV) cost recovery to sustain crude oil production level.
It explained that the development was due to the huge payment that the NNPC was paying for subsidy on petrol.
NNPC had in April, notified the Accountant-General of the Federation (AGF), Mr. Ahmed Idris, that it would not be able to remit any funds to the Federation Account in April for distribution in May.
NNPC said it posted a value shortfall of N111.966 billion in February 2021, which would ultimately impact on its ability to contribute to the joint account shared among the federal, state and local governments.
The corporation attributed the N111.966 billion shortfall to the rising average landing cost of petrol, which jumped to N184 per litre in March as opposed to the existing N128 ex-coastal price.
According to the corporation, the N111.966 billion incurred as landing cost would be deducted from April oil and gas proceeds due to the federation in May.
However, it was learnt that the impact on the account was not as far-reaching as expected because the Department of Petroleum Resources (DPR), which collects royalties and bonuses on behalf of the federal government, came to the rescue with the remittance of about $500 million it received from the marginal fields it recently put up for bids.
Minister of State for Petroleum Resources, Chief Timipre Sylva, had confirmed the role played by DPR in augmenting the FAAC allocation for April, which was shared in May.
The minister, however, did not disclose how much was paid into the account.
But the NNPC had in a reaction to the dust raised by the letter to the accountant general, stated that the corporation wasn’t broke, adding that the zero revenue projection only had to do with the federation revenue stream, which it manages and not a general reflection of its overall financial performance.
In the fresh notice raised by the corporation to deduct N126 billion from its remittance in June, it said it was still shouldering the burden of the differentials from the sale of petrol, which it prefers to call “under-recovery.”
