NNPC begins payment of N206billion debt owed Federal Govt.

Minister of State for Finance, Bashir Yuguda

The Federal Government on Tuesday received the first tranche of N10 billion as refund from a total of N206 billion outstanding debt owed the Federation Account by the Nigerian National Petroleum Corporation, NNPC.

In September 2011, the Federation Accounts Allocation Committee, FAAC, in a meeting had resolved that the NNPC should refund over N450 billion in 32 installments after its management agreed it withheld the money as total revenue from its operations that should have been paid into the Federation Account as stipulated by law.

In line with agreed repayment plan, the NNPC had been refunding to the Federation Account about N7.617billion every month since 2011. The amount was shared between state and Local Governments.

However, the Federal Government’s share of the refund, which was deferred, has since accumulated to about N206 billion, with the first tranche of N10billion paid as part of the total N611.767 billion distributable revenue shared at the FAAC meeting for the August 2014.

The Minister of State for Finance, Bashir Yuguda, said at the end of the meeting held at the Federal Ministry of Finance headquarters in Abuja that gross revenue received during the month stood at about N601.648 billion, which was lower than previous month’s figure of N630.325 billion by about N28.677 billion.

Mr. Yuguda attributed the decline in revenue during the month to the force majeure declared by Shell Petroleum Development Company, SPDC, apart from a series of shutdowns of crude trunklines and pipelines at various oil terminals in the Niger Delta region as a result incessant vandalism in the area.

He said payments and returns by some blue chip companies as well as increases in the receipts from company income taxes, CIT, significantly boosted the revenue level for the month.

The Minister said from a target of about N75 billion as additional revenue through taxation, about N40 billion has so far been met, as all agencies of government are working to ensure that they were tax compliant through improved filing and payment systems.

According to the Minister, the total distributable revenue for the month, including Value Added Tax, VAT, was about N611.708 billion, including about N504.646 billion from statutory sources; about N35.549 billion proposed for distribution under the Subsidy Reinvestment and Empowerment Programme, SURE-P.

Details of the revenues for the months showed that mineral revenue accounted for about N441.915 billion, while non-mineral revenue stood at N159.733 billion, totaling about N601.648 billion.

With a deduction of N36.394 billion as special distribution to the three tiers of government and N35.549 billion for SURE-P as well as N25 billion transferred to domestic Excess Crude Account, ECA, for payment to oil marketers, Statutory revenue allocation came to about N504.705 billion.

Net statutory revenue for the month after deduction of N4.44billion as 4 per cent and 7 per cent cost of collection by the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) came to about N496.799 billion.

A breakdown of the figures distributed among the three tiers of government showed that about N238.089 billion, or 52.68 per cent went to Federal; N120.762 billion or 26.72 per cent to states, and N93.102 billion, or 20.6 per cent to Local Governments, while N44.846 billion went to the nine oil producing states as 13 per cent derivation revenue allocation.

At the end of the meeting, the Minister announced that the balance in the ECA stood at about $4.1billion.

Chairman of the Commissioners of Finance Forum, Timothy Odaah, told reporters that the exact figure of how much was outstanding as refund by the NNPC from its indebtedness to the Federation Account was yet to be determined, as the final figure was still being reconciled.

Mr. Odaah expressed the concern of the states concerning the declining monthly revenue to the Federation Account, saying it’s only a pointer to the need for states to ensure that they were realistic with their estimates in the preparation of their budgets for next year.

“There is need for the states to consider the issue of diversification of their revenue base, in view of dwindling revenue yield from oil in recent times, particularly as 2014 is election year and most of the governors are approaching the end of their tenures,” Mr. Odaah said.

On the states agitation for fuel subsidy removal, the Chairman, who is also Ebonyi State Commissioner for Finance, said there was no going back on the issue, saying with submission of report by its committee indicating an overwhelming approval on the need for subsidy to go, they were waiting for the Federal Government on its next line of action.

“Subsidy should go to pave way for a more realistic approach to the country’s overall economic planning, considering that different states have different needs to meet in their different planning strategies,” he said.


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