Remittances by the Nigerian National Petroleum Company Limited to the federation account plunged by N1.581tn

Remittances by the Nigerian National Petroleum Company Limited to the federation account plunged by N1.581tn between January and October this year, data obtained from NNPC on Sunday showed.

It was, however, gathered that the drop was due to the humongous sums spent on subsidising Premium Motor Spirit, popularly called petrol, pipeline security and maintenance cost, among others during the 10-month period.

Figures obtained from the NNPC showed that N2.093tn was the net revenue that should have been remitted to the Federation Accounts Allocation Committee for sharing among the three tiers of government between January and October 2021.

But what was actually shared by the three tiers of government during the 10-month period was put at N511.667bn, while N1.581tn could not be shared as the sum was used to subsidise petrol, repair of vandalised pipelines, among others.

This came as economic experts advised state governments to start looking inwards, develop their Internally Generated Revenues and cut down on governance cost to stay afloat going by the plunge in what they share on monthly basis from the federation account.

An analysis of the NNPC data by our correspondent indicated that petrol subsidy alone gulped as much as N1.027tn during the period, an amount that almost doubled what was shared by the three tiers of government. This huge petrol subsidy spending was exclusively reported by The newsway last Monday.

It was also observed that pipeline security and maintenance cost consumed N42.76bn during the 10-month period, while frontier exploration services took N27.95bn, among other expenditures.

The projected monthly remittance as captured in the report by the NNPC was N209.307bn, but this target was never met all through the 10 months, as petrol subsidy kept cutting down the funds.

The monthly remittances showed that in January, February, March and April, the NNPC remitted N90.86bn, N64.161bn, N41.184bn and zero respectively to FAAC.

The national oil firm remitted N38.608bn, N47.162bn, N67.28bn, N80.03bn, N67.533bn and N14.85bn to FAAC in May, June, July, August, September and October respectively.

Further analysis of the document showed that the least monthly remittance of N14.85bn recorded in October was largely due to the high sum of N163.709bn that was spent on petrol subsidy in that month.

Last week, The newsway reported that the amount spent by the NNPC on subsidising petrol between January and October 2021 was N1.03tn.

The report also stated that the NNPC would deduct its October 2021 value shortfall of N199bn from its November 2021 proceeds meant for sharing at the December 2021 Federation Accounts Allocation Committee meeting.

The oil firm referred to its subsidy spending as under-recovery, as it had repeatedly stated that it had no authorisation by the National Assembly to pay subsidy.

For about four years running, the NNPC has remained that sole importer of petrol into Nigeria. Other marketers stopped importing the commodity due to their inability to adequately access the United States dollar.

The deductions by the NNPC from its remittances to FAAC had raised diverse concerns lately, particularly among state governors.

The Governor of Kaduna State, Nasir El-Rufai, for instance, recently decried the high cost of fuel subsidy, which according to him, was not reasonable.

He stated that the Nigerian Governors’ Forum had met and agreed to back the Federal Government’s transport palliative scheme as well as halt the petrol subsidy regime.

But on Sunday experts advised the governors to cut down on their costs of governance and increase their respective IGRs in order to shore up funds required for their projects.

The immediate past Director-General, Lagos Chamber of Commerce and Industry, Dr. Muda Yusuf, said, “Unfortunately there are no easy choices for the states but I think the one that is immediate is to see how they can cut down on their cost of governance.

“This is because the cost of governance in states is very high. Many of them have an unnecessarily long list of political appointees. So I think that is one key thing they can do, although politically it is difficult. But just like I said, this a time of taking very difficult choices.”

Yusuf, who is currently the Chief Executive Officer, Centre for the Promotion of Private Enterprises, added, “The second thing is for them to look at their environments and see how they can optimise the opportunities for revenue generation.

“Not so much by creating businesses or setting up enterprises, but by creating environments for investors within their states to perform better and for more investors to come to the states.

“This is because if the economies of their states are growing, their respective revenues will grow. For if the economy is growing and is being driven by investments, the revenue of the states must also grow.

 “However, this is not a short-term thing. It will take time to happen. These are the two basic things that they must do now that the revenue from FAAC is plunging and people are not ready to let petrol subsidy go.”

Also speaking on what the states could do to shore up funds, a former President, Association of National Accountants of Nigeria, Dr. Sam Nzekwe, stated that aside from improving their IGRs, state governors should use part of security votes to develop their states.

He said, “Some of the states are clamouring for restructuring. When we restructure, we will see how they will go to FAAC meetings to look for money. They should now sit down and look at how to improve their IGRs.

“Their security votes, which they don’t give account of should be brought out and scrutinised. They should add it to what they get from FAAC to beef up the income of their states this period.”

Nzekwe added, “The states have been part of the problem. How can a governor say his security vote should not be accounted for? So you just dip your hands there and do whatever you like with it. This is wrong!

“So the state governments should be able to look at how to improve their IGRs and this must not be done by punishing the people with taxes. Because some of them will now start mounting taxes upon taxes on their citizens in the name of improving IGR.”

The former ANAN president also urged states to cut down on their costs of governance, as this would further help in freeing up funds for developmental projects in states.

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