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Resolving FAAC, NNPC imbroglio

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Resolving FAAC, NNPC imbroglio

Nigeria always has a way of throwing its image in the open for global attention, more for bad than being positive. Although there are a few reasons to be proud of the country, the negative smear that rears up at times gives some kind of damning blight, thereby, making rejoicing short-lived.
The frequent spat between the Nigeria National Petroleum Corporation (NNPC) and state governments at the Federation Account Allocation Committee (FAAC) meetings over remittances into the Federation Account is becoming an embarrassment taken too far.
Nigeria is a country where money appears to control everybody. Soon, all the sparring would be forgotten simply because the states made a big hit with the recent sharing of N821.862 billion revenue allocation for June, being highest to be shared by the three tiers of government in recent time.
For an institution that is publicly owned, it amounts to reckless display of impunity to unilaterally consult the law, interpret it and finally take a decision that would always be in its favour.
By the law establishing Department of Petroleum Resources (DPR) and Petroleum Profit Tax (PPT), royalty should be remitted directly to DPR, and PPT to the Federal Inland Revenue Service (FIRS) in accordance with the law of the country.
NNPC, probably because of the power it wields as a result of enormous resources under its control, is being watched while it is gradually getting bigger than the people it should serve.
In absolving itself of recent blame, the corporation said it faithfully kept to agreement entered with FAAC on remittance into the federation account.
Not prepared to lose out in the battle, the nation’s oil corporation confirmed an agreement with FAAC that it should always remit N112 billion monthly, saying that the request from the governors for additional N40 billion despite raising N147 billion actually stalled the meetings.
Beyond raising issues around the figures presented, the allegations from the governors’ point of view as presented by Forum of Finance Commissioners have not been satisfactorily defended by the nation’s highest revenue generating agency other than claiming to be mandated by law, in some instances, to spend part of what had been generated on services rendered, joint venture (JV) agreements and other miscellaneous engagements.
More embarrassing is the fact that it is taking the intervention of President Muhammadu Buhari to resolve an issue where the parties involved should have statutorily played according to the laws of the land.
That on its own is suggestive of the fact that more cases would continue to sprout out of lawlessness where the intervention of the president would be required.
For instance, in one of the series of allegations against NNPC, Chairman of the state commissioners’ forum, Mr. Mahmoud Yunusa, the umbrella body of the 36 state commissioners, said the law required the NNPC to remit all funds accrued from the sales of crude oil into the Federation Account, which the corporation often flouts.
There is also the non-payment of royalties to the DPR and PPT to the FIRS.
According to Yunusa, rather than paying the money to the agencies and allowing them to remit same into the Federation Account, NNPC would rather play that role just to make the amount large before the forum, whereas a larger part of it had been unlawfully deducted.
There is also the allegation of arbitrary deduction of money for expenses without carrying along the other government agencies that are statutorily empowered to handle such expenses.
Another very important issue in contention is that of flat remittance by the corporation to the Federation Account irrespective of the prices of crude oil at the world market.
The argument in this regard is quiet clear in the sense that the forum is only requesting NNPC to lay all facts bare as it should not expect it to accept and adopt whatever amount remitted to FAAC.
Specifically, Yinusa believes “there are a lot of happenings with NNPC figure. NNPC claims it has remitted N147 billion, but what the NNPC actually remitted to FAAC is N127 billion. By law, NNPC is required to remit all funds accrued from the sales of crude oil. Based on our analyses, this N127 billion is inclusive of royalty and PPT.
“How can that be? By the law establishing these agencies (DPR and FIRS), royalty should be given to DPR, while PPT should be given to FIRS in line with the law. NNPC has remitted N127 billion and it claims it was expected to remit only N112 billion.”
As the issue is gradually becoming a global embarrassment, adding up to other filth around us, we believe it is time both parties meet, look into what the law actually says and obey same.
We also advise both parties to display utmost caution whenever they take certain decisions so as not to put the pains on the ordinary man. The states depend on receipts from FAAC for their existence. As such, the disagreement over remittances must be properly addressed.
Ultimately, the Federal Government should speed up the signing of the Petroleum Industry Governance Bill (PIGB) into law so as to take care of current discrepancies in the system.

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