Commissioners of Finance, who had converged in Abuja with the expectation to collect their states’ share of the monthly allocation, on Wednesday stormed out of the Federal Accounts Allocation Committee, FAAC, meeting as they protested the deductions.
As they walked out to protest the failure of the Nigerian National Petroleum Corporation, NNPC, to show up after failing to respond to the request of the committee to be more forthcoming with its operational accounts and remittances, Chairman of FAAC’s Forum of Finance Commissioners, Mr Mahmood Yunusa, said they were going back to confer with the state governors.
Reacting, the National Economic Council, NEC, on Thursday threw its weight behind FAAC’s decision to reject the remittance by the NNPC into the Federation Account in May, but warned that payment of salaries might be affected in the states.
The Minister of Finance, Kemi Adeosun, who chairs the FAAC, disclosed that committee members of FAAC felt that some of the costs presented by the NNPC could not be justified hence they decided that rather than approved the accounts, the negotiations should continue until agreements reached.
Speaking with State House Correspondents on Thursday at the end of the monthly NEC meeting, she observed that the remittance from NNPC fell below expectation and was consequently rejected by FAAC.
Adeosun, who said she had sought the understanding of governors over FAAC’s inability to share the monthly collectible revenues among the three tiers of government as a result of under-remittance by the corporation, added that she had also briefed both the president and vice-president on the development.
According to her, based on the current price of crude oil, the expected amount into the federation account can easily be calculated and known, pointing out, however, that what NNPC presented to FAAC fell short of the expected figure, and hence, the need to hold the corporation accountable.
While revealing that she brought up the matter to the NEC chaired by Osinbajo, with State Governors, the Central Bank Governor, and others as members, Adeosun disclosed that the NEC was not comfortable with the costs presented, and had asked the NNPC to explain the circumstances around the development.
She said, “Also in my capacity as chairman of FAAC, I briefed governors on the deadlock that we have got into currently in the federation account and explained what happened. And there was quite and 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 costs being implemented.”
Asked to explained what exactly was the issue with the NNPC, Adeosun said, “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.”
While giving updates on the balances of the federation accounts, Adeosun said, “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, stabilisation N18,892,864,216.65, Natural Resources N133,715,427,387.37.”
Governor Ifeanyi Okowa of Delta State, who briefed the press alongside Adeosun, disclosed that the NEC approved the financial report of the Nigeria Sovereign Investment Authority (NSIA), for 2016 and update for 2017.
He said the report indicated a positive profitability over the past five years, at about $8 million per year; and $1.25 million as assets at a rate of 6.6% return on assets.
Okowa said, “At the meeting today, we did take the annual reports and accounts of National Sovereign Investment Authority (NSIA) for the year ended 2016 and an update on 2017 activities.
“The main issue was the NSIA report on five years so far of profitability in all forms with core profits of about N26.28 billion which is about $88 million in 2016. NSIA also reported that the total profit on that management was about $1.25 billion for most part of the year but they had received an extra of $250 million that was received in the third quarter of 2017.
“It also did report that the returns on assets was up to 6.6 per cent in dollar terms which we considered to be quite good in terms of returns. It is actually shifting its focus now to infrastructure and direct investment locally in the country which is of great benefit to us as a nation.
“The 2017 activities of the NSIA also include the implementation of Presidential Fertilizer Initiative (PFI) in 2017. They commenced the construction of free health projects in Lagos, Kano and Umuahia, Abia State. They continued with the work, the funding of the work on the Second Niger Bridge in which they had been involved in the past.
“They also did invest and own 13 per cent of Bridge Academy Ltd, a network of schools which delivers high quality affordable primary education to lower income earners and it is hoped that they will do that too in other states of the federation.
“They also did invest in Babagona, an agricultural franchise, that empowers small holder farmers across the country, and in 2018, they intend to focus on executing infrastructure investment across the nation which includes roads, investment in agriculture and health.
“We are hoping that all this will impact on infrastructure development and development of industrial real estates across the country. Council eventually resolved that the account of NSIA presented to us should be approved and council so approved.”