Home Business Oil & Gas We withdrew N3.3tr from Federation Account for fuel subsidy – NNPCL

We withdrew N3.3tr from Federation Account for fuel subsidy – NNPCL

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The Nigerian National Petroleum Corporation Plc (NNPC) deducted over N3.3 trillion from January to November, last year to pay for fuel subsidy.

The deductions were made from revenue the NNPC was supposed to remit to the Federation Account.

This is contained in the Federation Account Allocation Committee (FAAC) Post-Mortem Sub-Committee (PMSC) report presented to FAAC on Tuesday in Abuja.

The report stated that NNPC “deducted N152,852,247,197.02 as Premium Motor Spirits (PMS) value shortfall recovery for  November 2022. This brings the cumulative deduction between January and November 2022 to N3,302,465,705,596.30”.

The report also accused the NNPC of failing to disclose the locations of Government Priority Projects it inherited when it transformed into NNPC Limited (NNPCL).

According to the report, “NNPC Limited was yet to disclose the locations of the Government Priority Projects to enable the Sub-Committee visit and assess the level of work done because of the deductions from the Federation Account”.

The report noted that “following the implementation of the Petroleum Industry Act, 2021 which transferred Joint Venture (JV) assets in the oil and gas sector to NNPC Limited except for Production Sharing Contract assets, the Priority Projects are owned by NNPC Limited”.

Between January 1999 and July 2022, the NNPC is said to have deducted N1,096,867,042,733.94 for government priority Projects,  an amount, which should have gone into the Federation Account.

The Nation learned that these priority projects were supposed to contribute revenue into the Federation Account but have remained invincible to FAAC.

Last year, the NNPC did not remit a kobo into the Federation Account because it was using revenue generated from the sale of crude oil to pay for PMS subsidy. This significantly impacted the quantum of monthly allocation the states ought to have received last year.

The FAAC Post-Mortem Sub-Committee also discovered that the NNPC Plc underpaid the Federation Account by N185,458,842,270.76 “as a result of NNPC using Exchange Rate lower than the CBN official rate on Domestic Crude sale for the period 2015 to 2022”.

The report said the Central Bank of Nigeria (CBN) “has confirmed that NNPC did not use the rate advised by the CBN while NNPC has not yet responded to the matter after several months of being given the analysis to review”.

“Despite the concerns of the Federal Inland Revenue Service (FIRS), Nigerian Upstream Petroleum Regulatory Commission and other stakeholders, NNPC Limited has continued to use a different Exchange Rate in remittances to the Federation Account till date”, the report lamented.

The Post-Mortem Sub-Committee appealed to the FAAC plenary to decide on the appropriate exchange rate to be used by NNPC Limited on remittances to the Federation Account to avoid underpayments to the Federation Account, and engage a third-party forensic auditor to validate the established underpayments to the Federation Account by NNPC.

For November 2022, the PMSC informed the FAAC gathering known as the Plenary that $687,552,746.48 (equivalent to N272,916,178,043.86) was recovered in favor of the Federation Account as outstanding arrears from several revenue items of the collection and paid to the designated accounts.

However, from January to November 2022, the Sub-Committee recovered a total of N1,620,336,606,670.97. The largest recoveries were made in September N1,313,829,045,133.43 and October N1,347,420,428,627.11.

Remittances into the Federation Account for November 2022 fell below target from N1,223,938,215,938.96 target to N947,165,536,669.42 actual remittance resulting in a loss of N276,772,679,269.54.

Between January and November 2022, the Federal Inland Revenue Service (FIRS) paid N2,261,008,368,248.29 as Value Added Tax proceeds into the Federation Account.

The PMSC reported that the total receipts into the Electronic Money Transfer Levy account from January 2021 to November 2022 stood at N215,614,963,053.21 while “the sum of N109,132,448,675.00 was disbursed leaving a balance of N106,898,399,378.21”.

The Sub-Committee said it had “earlier reported that there was an on-going reconciliation between CBN and FIRS on the shortfalls in respect of the duplicate payments made to the tune of N3,403,573,888.22 by Ecobank Plc in the month of October 2022”.

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