NNPC reveals it would not be able to make remittance to FAAC as subsidy consumes revenue

Mr. Mele Kolo Kyari, the new Group Managing Director of the Nigerian National Petroleum Corporation (NNPC)

The Nigerian National Petroleum Corporation (NNPC) has alerted the Federal Government of Nigeria that it would only be able to remit N12.966billion to the Federation Accounts Allocation Committee (FAAC) in June after paying for fuel subsidy.

The NNPC noted that it would not be able to make any remittance for the month of April, and May.

FAAC Committee meets monthly to share funds among federal, state and local governments. The committee consists of the finance minister, state commissioners of finance, state accountants – general, accountant-general of the federation and the permanent secretary of the Federal Ministry of Finance.

The revenue shared comes from money generated by the Nigeria Customs Service, the Federal Inland Revenue Service and the NNPC. But NNPC is the major contributor as crude oil is the biggest source of revenue for Nigeria.

In a document titled, ‘January to March actual and April to June projected remittance to federation account,” sent to the Accountant General of the Federation, the NNPC explained how fuel subsidy had affected its revenue remittance to FAAC.

The letter was also copied to the Minister of Finance, Budget, and National Planning; the Director-General of the Nigeria Governors’ Forum; the Director, Home Finance; and the Chairman, Commissioners of Finance Forum.

The letter reads in parts; “The Accountant-General of the Federation is kindly invited to note that the average landing cost of premium motor spirit for the month of March 2021 was N184 per litre as against the subsisting ex-coastal price of N128 per litre, which has remained constant notwithstanding the changes in the macroeconomic variables affecting petroleum products pricing.

“As the discussions between government and the labour have yet to be concluded, the NNPC recorded a value shortfall of N111,966,456,903.74 in February 2021 as a result of the difference highlighted above.

“The AGF is invited to note that the sum of N111,966,456,903.74 will be deducted from April 2021 oil and gas proceeds due to the federation in May 2021, which will translate to zero remittance to the Federation Account from NNPC in the month of May 2021.”

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