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NNPC zero remittance: States will find it difficult to survive –Governors

The Senior Special Adviser on Media and Publicity to the Cross River State governor, Mr. Christian Ita, has said that his state may not be able to pay salaries if the Nigerian National Petroleum Corporation (NNPC), insists it cannot remit revenue for May into the Federation Account. Similarly, the Director- General, Media and Communications to Governor Ahmadu Fintiri, Solomon Kumanga, described as a bad omen the decision of the NNPC to many states. But, the chief press secretary to the Governor of Bayelsa State, Daniel Alabrah, has argued otherwise, saying that the NNPC didn’t say that there will be no money. “It was Dino Melaye that said that.”

Following the development, the Ekiti State Governor, Dr. Kayode Fayemi, believes the situation will bring about economic challenges, which demand government measures to cut spending. The governor however disclosed he would not sack any workers despite the cash crunch. Recall that in March, the Group Managing Director (GMD) of the NNPC, Mele Kyari, had warned that the Corporation can no longer bear the burden of underpriced sales of Premium Motor Spirit (PMS), better known as petrol, to consumers in the country.

This, he said, is because the NNPC has disclosed that its projected monthly remittance to the Federation Accounts Allocation Committee (FAAC) for May will be zero. Kyari, however, promised that there will be no increase in the price of petrol until talks between the government and stakeholders are concluded.

But, Ita said since the investments the Cross River State governor is making have not reached the productive stage, dealing with zero allocation, which is what will happen to the state, will have a telling effect on both payment of salaries and overheads, among other commitments of the state government.

He said: “If all the investments the state governor has made, which for now will take a while before they are productive, were producing, we would not have any problem. “In the event that NNPC cannot remit revenue to the Federation Account, it will be tough for the state.

“You know that monies go into the Federation Account from three sources – Customs, Federal Inland Revenue Service (FIRS) and NNPC, but the NNPC accounts for about 60% of the total revenue. “So, if NNPC does not remit to the Federation Account, it will be definitely tough for Cross River State.” In a similar vein, Kumanga also said: “This is a bad news for states like Adamawa that have limited areas of Internally Generated Revenue (IGR) that depends critically on the Federation Accounts to survive in managing its services, pay salaries and provide infrastructural development to the entire people.”

Kumanga, who described the news as “suicidal”, however noted that the introduction of certain fiscal measures in the state has returned discipline into how the government carries out its expenditure. “The government has equally introduced the Treasury Single Accounts (TSA) where all government incomes and revenues are remitted into, which also helps to improve the IGR in the state. “If the decision of the NNPC comes to reality, states must have to tighten their belts to improve on their IGR.

“It is too premature for NNPC to come up with that move; I am feeling that this issue should have been discussed since last year when they knew there will be problems in what is being generated and put into the Federation Accounts, ” he said. He, however, called on the NNPC to reconsider its decision because, according to him, many states in the federation will definitely collapse considering the burden they have to take. Also, Alabrah said: “If NNPC does not disburse any money to Federation Account, it is not only going to affect Bayelsa State.

“So, it’s not a Bayelsa problem. It is a national problem because every state gets from there. “The oil producing states get 13% derivation but all states get from there. So, it is not a Bayelsa problem. “We are not going to be drinking Panadol before the headache will start. Let’s wait, if FAAC didn’t hold, that is when we can make noise. “We are not losing any sleep yet until FAAC refuses to hold, then the Federal Government will now tell us whether Dino Maleye is right or not. “Civil servants won’t go without pay. That is what I will tell you.

Don’t worry yourself. We don’t have any reason to panic until that time. “It is not a Bayelsa issue. It will affect Nigeria as a whole. Just wait and see at that time whether Bayelsa will not pay salary.” And Governor Fayemi had on Tuesday, May 4, called for a stakeholders meeting where they brainstormed and agreed on some cost saving measures to withstand the consequent economic crisis.

Part of the measures agreed upon include reduction in subventions to higher institutions in the state, cutting or total stoppage of running grants to offices, and discontinuation of the consequential adjustments of the minimum wage for senior category of workers as well as ramping up of tax collection to boost IGR. The governor also added that there was a need to cut over N680 million expenses per month. He said the way out of the situation is the need to significantly increase the state’s monthly IGR from N700 million to N1.2 billion. He said: “We need to take decisive and quick steps on these tough but necessary choices that we have to take in order to restore the state back to fiscal health; then swift consolidation action taken in short term and continuous review to inform medium to long term planning.


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