Despite NEITI’s $1.9bn FAAC under-remittance claim, FG owing NNPCL over $9.74bn fuel subsidy debt

Despite the claims by the Nigeria Extractive Industries Transparency Initiative (NEITI) that the defunct Nigeria National Petroleum Corporation (NNPC) did not remit $1.9bn to the federation account in 2021 before transitioning to a commercial venture, the federal government has the biggest indebtedness to the national oil company with about N4.1trn ($9.74bn) for subsidy payment.

NEITI had last Monday disclosed in its 2021 oil and gas report unveiled in Abuja that NNPC failed to remit $1.9bn to the Federation Account Allocation Committee (FAAC) before the transition.

The corporation had transitioned into NNPC Limited on July 19, 2022, to operate as a commercial entity under the regulation of the Companies and Allied Matters Act (CAMA).

The move ended its dependence on federal government funding to operate.

President Bola Tinubu had on May 29 removed the subsidy on petrol following the inability of the federal government to carry the huge payment burden.

Before the removal of petrol subsidy, the NNPCL has been the sole importer of petrol into the country spending about N400bn monthly on behalf of the federation through an arrangement known as under-recovery.

Subsidy or under-recovery is the shortfall for the underpriced sales of premium motor spirit, better known as petrol.

From January 2023 to May 2023, petrol under-recovery totalled N1.828trn which is 55 percent higher than the N1.27trn paid in the corresponding period of 2022.

Sources close to the Presidency said  that although NNPC Limited received several letters from FAAC requesting payment of the about N2.8trn that NNPC is allegedly owing the federation accounts, the Company said it could not pay any money to FAAC pending the reconciliation of the N4.1trn debt the Federal Government was owing it. 

“The federation owes NNPC almost 4.1trn and NNPC owes about N2.8trn to the federal government, so they should actually give it cheque for the debt of N1.3trn they owe NNPC Limited,” one of the sources said.

Already, President Bola Tinubu has set up an inter-agency committee to resolve the lingering row between the NNPC Limited and FAAC in the last couple of years.

The Presidency  said that vested interests had told the new president things that were not entirely factual, prompting the national oil company to write that the matter should be resolve once and for all.

 “So many things have been told to Mr President since assuming office by some vested interests that NNPC Limited has refused to pay into the federation accounts.

 “And because we want the general public to know the truth, NNPC Limited management wrote the President to investigate the matter and Mr President has graciously approved that an inter-agency committee be set up to investigate and reconcile the matter,” the source stated.

FAAC had severally accused the NNPC Limited of short-changing it by refusing to pay N2.8trn to the federation account from crude sales, royalties and taxes while the NNPC Limited on the other hand had said that the Federal Government was owing it over N4.1trn in subsidy payment, power debt and other sundry charges.

The committee, which began sitting in June at the Ministry of Finance has been mandated to reconcile the controversies surrounding the N4.1trn debt the Federal Government is owing NNPC Limited and the N2.8trn that the NNPC Limited is said to have failed to remit to the federation account. 

Besides, the ministry of finance and NNPC Limited, other members of the debt reconciliation committee include the Nigerian Upstream Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS), Office of the Accountant General of the Federation (OAGF) and FAAC Post-Mortem Sub-Committee.

The establishment of the committee  by the President, followed a memo dated June 13, 2023 by the Group Chief Executive Officer (GECO) NNPC Mallam Mele Kyari appealing to him to intervene in the matter.

The letter stated that this was with a view to putting to rest all the allegations and counter allegations by both FAAC and NNPC Limited on the status of the debts and remittances.

It was learnt that a preliminary report has been submitted by the committee to the President.