FAAC orders NNPCL: Refund N2.1trillion deducted for subsidy

The Federation Account Allocation Committee (FAAC) is on a warpath with the Nigerian National Petroleum Company Limited (NNPCL) over petrol subsidy deductions.

The FAAC accused the company of denying the government of huge funds from January to March. FAAC is a body that distributes revenues generated into the federation account to the tiers of government and other agencies that benefits from the fund.

“We will not back down on our demand for the reimbursement of the outrageous deductions from accruals into the federation account,” a senior FAAC source told The Nation.

On May 16, FAAC asked NNPCL to refund over N2.1 trillion to the federation account.

The NNPCL is yet to make the refund, arguing that the Petroleum Industry Act (PIA) does not permit it to do so.

Details of the net-offs are contained in FAAC’s Post Mortem Sub-Committee (PMSC) report submitted to the whole house at its last meeting in Abuja.

According to the document, “the Sub-Committee requested NNPCL to net-off the sum of N1,432,576449,686.59 from the total Value Shortfall (subsidy payment) of N3,602,392,567,863.19 as per NNPCL April 2023 report”.

This will leave NNPCL owing the federation account N2,169,816,118,177 as of March.

“However, the NNPCL representative explained to the sub-committee that the PIA did not authorise the company to do a net-off,” the report states.

According to the PMSC report, “the NNPC Ltd deducted N341,530,577,208.78 as PMS value shortfall payables for March 2023”. The report presented how NNPCL denied the federation account of billions from January to March.

The report states: “Value Shortfall Recovery (subsidy) from Federation Account as of March 2023: Opening Balance (01/1/2023) was N526,461,161,901.53.

“In January 2023, NNPCL deducted N309,192,846,944.09, bringing the cumulative deduction for January to N835,654,008,845.62.

“In February 2023, NNPCL again deducted N255,391,863,631.18, resulting in a cumulative figure of N1,091,045,872,476.80. In March 2023, N341,530,577,208.79 was deducted, bringing the total deductions as of March 2023 to N1,432,576,449,686.59.

“The FAAC members alarmed by these deductions then asked the NNPCL to net-off the sum of N1,432,576449,686.59 from the total Value Shortfall (subsidy payment) of N3,602,392,567,863.19 as per NNPCL April 2023 report.”

The sub-committee recommended: “The Chairman FAAC (Minister of Finance) should work with the NNPCL on how to net-off the payable amount to reduce the outstanding value shortfall (subsidy) against the Federation Account.”

The NNPCL Group Chief Executive Officer (GCEO) Mele Kyari last week said that the company was owed N2.8 trillion in petrol subsidy.

The FAAC is emboldened to go after subsidy deductions following recoveries it made in favour of the federation account.

The report adds: “For March 2023, the PMSC will like to inform the FAAC Plenary that a total sum of N144,037,514,518.20 was recovered in favour of the federation account as outstanding arrears from several revenue items of collection and paid to designated accounts.

“These revenue items and what they coughed up for the federation account are the Nigeria Liquified Natural Gas (NLNG) Feedstock Sales Value Revenue Arrears, $47,635,326.80 at 434.98 Rate/$ (N/$) or N20,720,414,451.46; Federal Inland Revenue Service (FIRS)/ Direct Sale Direct Purchase (DSDP) Naira Petroleum Profit Tax (PPT) Transfer Arrears of N95,666,959,482.83.

“Others are the Nigerian Upstream Petroleum Regulatory Commission (NUPRC)/DSDP Naira Royalty of N20,390,322,561.34; and NUPRC/PSC/MCA Oil and Gas Dollar Royalty $16,690,004.19 at 434.18 or N7,259,818,022.57.

“This brings the total recovery into the federation account in March 2023 to $64,325,330.99 or N144,037,514,518.20.”

FAAC questioned the exchange rates used to conduct business by the NNPCL.

The report states: “NNPCL using exchange rate lower than the CBN mandated official rate on Domestic Crude sale, FIRS PSC Crude and NUPRC Royalty Crude Sale for the period January 2015 to December 2022, the sum of N195,595,585,470.70 was established as a shortfall.”

The sub-committee said it “met with NNPC and all the relevant agencies and agreed on the principles to be used for the remittances”.

“Thereafter, NNPCL requested some time to discuss with its top management.

“However, on the 12th of May, 2023, NNPCL forwarded its position to the sub-committee and it is being looked into by the ad-hoc committee.” Nation