NNPC remittances: Salary delays likely over FAAC meeting deadlock – Adeosun

Salaries in states may be affected unless issues that led to the deadlocked meeting between the Federation Account and Allocation Committee (FAAC) and governors last week were resolved, Minister of Finance Kemi Adeosun has said.
Addressing State House reporters yesterday after a meeting of the National Economic Council, Adeosun said the costs presented by the Nigerian National Petroleum Corporation could not be justified.
She said NEC had demanded explanations from the NNPC for unclear costs it made from FAAC. “In my capacity as chairman of FAAC, I briefed governors on the deadlock that we have got currently in the federation account and explained what happened. And there was quite an extensive debate on what to do.
“For the purpose of this briefing, we operate NNPC as a business, we have invested public capital in that business and we have expectations of return and when that return fails lower than our expectations then the owners of this business, which in this case is the federal government and states, need to act. So, that was what caused the deadlock yesterday (Wednesday) and we really felt the figures the NNPC was proposing for FAAC were unacceptable. We felt that some of the costs couldn’t be justified and so we have decided that rather than approve the accounts, we will go back and do further work.
“So further negotiations and interactions are going on with NNPC, as we speak. However, we did brief both Mr. President and Mr. Vice President on the deadlock and asked for their support and their forbearance in this because the consequence of this is that, salaries might well be delayed in many states as a result of this. “But we feel that in order to get to the accurate figures that we need, we have asked for forbearance and the governors and the federal government are all in agreement that we need to get to the bottom of those figures.
“In particular, now that the oil price is now $76 per barrel in the spot market which means that bonny light is about $78, we want to be aggressively putting money away into the excess crude account. So we are very, very conscious that this period, this window of relatively high oil price might not last and we will like to be able to save. If we cannot get into the federation account the sort of revenues we are expecting then we will not be able to save. So it was a very important point really underscored by all the governors and they really want action taken and they are fully in support of the positions of the Federal Ministry of Finance and the commissioners of finance not to approve those accounts until we get further explanations on some of the cost being implemented.
“Based on oil price, oil quantity you can pretty much calculate what you are expecting to see in the federation account and if the figure is less, then the right question that any stakeholder must ask is why.
“So we have been going back and forth with NNPC to try and understand these figures before we can accept them. Remember that the FAAC figures have to be formally accepted by the federation-account committee and we were simply not comfortable with the quantum of some of the deductions made and therefore we could not approve those figures. So even as we speak, there is an interface going on between the commissioners forum, ministry of finance, office of the accountant general, CBN and NNPC but we hope to be able to convene FAAC within next few days.”
The minister provided an update on the balances of the federation accounts thus: “Items to note on the excess crude account is that in May we had an additional credit of $80.6 million that accrued into the excess crude account.
“The balances on the excess crude account $1,916,742,289.60, stabilization N18,892,864,216.65, Natural Resources N133,715,427,387.37.”
In another development, the council set up a committee comprising the governors of Kano, Osun, Delta, Anambra, CBN Governor and the Minister of Education, to look into what should be done to address the falling standard of education in the states.
NNPC justifies N147bn June remittance to FAAC
Meanwhile, the NNPC has said that its N147billion June remittance to FAAC was in line with the terms of agreement it had with governors on the matter.
This came as the FAAC meeting in Abuja on Wednesday night ended without the usual sharing allocations for the month.
The NNPC, in a press statement by its spokesman Mr. Ndu Ughamadu, said the agreement it had with the governors was that the corporation would make a monthly remittance of N112billion to FAAC subject to sufficient funds from sales of domestic crude oil allocation for the corresponding month after meeting cash call obligations on JVs, deductions of Premium Motor Spirit (PMS)-cost under recovery and pipeline maintenance.
Ughamadu said NNPC was able to surpass the terms of agreement with the governors on the monthly remittance for the month of June by N35billion, having taken a cue from their postures by taking from the sum meant for settling cash call obligations. The corporation regretted the governors’ additional request of N40billion, describing it as unfortunate, given the fact that NNPC is set to exit the cash call phenomenon.
Since February 2018, FAAC meetings have ended in stalemate, with the inability of the NNPC to remit enough revenue always cited as reason. – Daily Trust.