How to resolve FAAC, NNPC revenue controversy – Finance Commissioners

Pic.4. FAAC meeting concluded in Abuja, FG, States, LGs share N647.39bn
FROM LEFT: Director of Funds, Office of the Accountant-General of the Federation (AGF), Mr Alexander Adeyemi; AGF, Alhaji Ahmed Idris; Minister of Finance, Mrs Kemi Adeosun; and Chairman, Forum of Federal Account Allocation Committee (FAAC) Commissioners/Adamawa Commissioner of Finance, Alhaji Muhamoud Yanusa, during a crucial meeting of FAAC on Wednesday (28/3/18). The monthly FAAC meeting, which began on Tuesday, was inconclusive due to discrepancies of about N37.76 billion in revenue presented by the NNPC. FG, States, LGs Share N647.39bn. 01799/28/3/2018/Jones Bamidele/NAN

The Finance Commissioners’ Forum of the Federation Accounts Allocation Committee (FAAC) on Sunday proffered solutions to the lingering crisis in the monthly revenue remittances by the Nigerian National Petroleum Corporation (NNPC).

The Chairman of the Forum, Mahmood Yunusa, told reporters in Abuja that members have tabled a proposal for government to immediately strip the NNPC of the responsibilities to collect and remit to FAAC oil royalties and petroleum profit tax (PPT).

He said the responsibility of collecting and remitting oil royalty should be returned to the oil industry regulatory authority, the Department of Petroleum Resources (DPR), as stipulated under the petroleum industry law.

Similarly, the collection and remittance of the PPT should be returned to the Federal Inland Revenue Service (FIRS) in line with the law, he said.

Royalty is usually collected by government or mineral rights owners, either in cash or oil, from licensees based on percentage of gross production. Oil royalty is calculated and paid based on the volume of crude oil lifted.

PPT is charged based on the income of oil companies engaged in upstream petroleum operations.

Mr Yunusa said the proposal was part of the process to strengthen the system to ensure the crisis in revenue remittances by the NNPC to the FAAC was finally resolved.

In June, FAAC meeting ended indeadlock thrice due to irreconcilable differences on revenue remitted for sharing by the NNPC.

“DPR will ensure the actual amount for royalty is collected and remitted. If there is under-remittance, the DPR will be responsible for the shortfall.

“On PPT, the NNPC has to remit the same amount to be remitted to FIRS. If not, the FIRS will not accept, because they would not want to be responsible for the shortfall or under-remittance,” Mr Yunusa said.

He said the arrangement would help balance the revenue collection system and ensure checks and balances.

“If the NNPC remits its royalty to the DPR and PPT to the FIRS, it cannot come to FAAC o claim nothing was contributed to the federation,” he noted.

Beyond royalty and PPT, the chairman said other issues within the NNPC and other parastatals under the finance and petroleum ministries would soon be given similar attention.

Besides, he said, focus would shift to other revenue generating agencies like the Nigeria Customs Service, FIRS, DPR and those in the non-mineral sector.

For instance, he said latest FAAC report revealed FIRS recorded a sharp drop of about N90 billion in its revenue collections for May and June, which should be investigated to establish the reason that happened.

On why the FAAC meeting was deadlocked thrice, Mr Yunusa blamed it on the inability of government to get the NNPC top management to sit with other interest groups to reconcile the records.

He said the proposal on the NNPC’s role in royalty and PPT collection would be resolved once its officials were back in the country.

“It’s just fair that if such decision should be taken, it should be in a joint session involving the Governor’s Forum, the Ministry of Finance, the NNPC as well as the Forum of Finance Commissioners,” he said.

On plans by FAAC in March this year to hire forensic auditors and consultants to work with the NNPC on the revenue records, the chairman said the plan remains.

He said FAAC members were not persuaded by NNPC’s claims that its inability to remit sufficient revenue for distribution among the three tiers of government was as a result of its plan to exit the Joint Venture Cash-Call.

NNPC is the principal equity holder in the six joint ventures in the oil and gas industry, accounting for an average of 60 per cent shares in each, except the Shell JV where it has 55 per cent stake.

Contributions for the cash call budget every year follow its equity holding in the each of the JVs.

Following the stalemate of the FAAC meeting on June 27, the NNPC spokesperson, Ndu Ughamadu, said the N147 billion remitted for sharing for the month came after meeting certain operational obligations, including payment for JV cash calls.


NEVER MISS A THING AGAIN! Subscribe to our newsletter

* indicates required

DOWNLOAD THE PREMIUM TIMES MOBILE APP

Now available on

  Premium Times Android mobile applicationPremium Times iOS mobile applicationPremium Times blackberry mobile applicationPremium Times windows mobile application

TEXT AD: To place a text-based advert here. Call Willie - +2347088095401


All rights reserved. This material and any other material on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from PREMIUM TIMES.