The financial pressure on the three tiers of the Nigerian government is escalating as deductions from the oil revenue, the major source of inflow to the Federation Account, rise sharply.
The Vanguard Public Finance Report findings from the Federation Account Allocation Committee, FAAC, show that the Nigerian National Petroleum Corporation (NNPC) Limited deductions increased by 40.45 percent Quarter-on-Quarter, QoQ, in the first quarter of 2022 to N883.45 billion from N629.07 billion in the preceding quarter, Q4’21.
The deduction effected in March stood at N266.52 billion while other deductions in the past months were February 2022 (N228.52 billion), January 2022 (388.52 billion), December 2021 (N194.11 billion), November 2021 (N284.01 billion), and October 2021 (N150.95 billion).
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The deductions, according to the NNPC report to FAAC were to offset for the payment of petrol subsidy, pipeline repairs and joint venture cost recovery.
That is not all, the Corporation is also set to deduct another N328 billion for outstanding subsidy payment from revenue due for sharing in the month of April, 2022.
February 2022 petrol subsidy was reported as N253 billion by the Corporation.
The NNPC’s presentation to the FAAC meeting for March 2022 disclosed that the deducted N266.52 billion consists of N219.78 billion subsidy payment (termed value shortfall), N46.37 billion as Joint Venture Cost recovery and N368.03 million for pipeline repairs and maintenance.
A further breakdown showed that N368.03 billion was deducted as strategic holding cost by the corporation.
Meanwhile, the Corporation in the report stated that export crude receipt for the month of February was $2.73 million, domestic gas receipt N13.10 billion and other receipts $15.42 million. Domestic crude oil and gas sales receipt was N266.52 billion.
NNPC reported: “The value shortfall of N219.78 billion was charged for the month which comprises of N195.98 billion for January 2022 plus part of the November 2021 spot cargo arrears of N23.81 billion.
“The estimated Value Shortfall of N328 billion consisting of N253billion for February 2022 recovery plus balance of November 2021 Spot Cargo Arrears of N75 billion, is to be recovered from the March 2022 proceed due for sharing at the April, 2022 FAAC Meeting”.
The Chairman of Nigerian Governors Forum and the Governor of Ekiti State, Dr. Kayode Fayemi, had last week expressed state governors’ frustration at not benefiting anything from the rise in the price of crude oil in the international market.
Fayemi, who questioned NNPC profitability status, said it was time to rethink how the industry is managed to make it more transparent and accountable to Nigerians.
He explained: “We’ve just had Federation allocation accounts. Committee meeting a couple of days ago, and the NNPC contributed zero to the Federation account this month and this is not the first month that the NNPC is contributing zero. Over the last couple of months we’ve been having these challenges of course, we know why.
“Even though oil prices in the international market are going up, maybe $110 today or more, the more it goes up it would appear that the more we suffer locally now.
‘‘So there’s an ambiguous relationship of sorts between what is happening in the international market and what we’re experiencing here in Nigeria and as critical stakeholders in the Nigerian Federation, states are naturally concerned about this, they are concerned about how to grow this industry and ensure that this industry is sustained over the long term in a manner that it can benefit those who are stakeholders in the industry.
“That is partly why for us governments of the sector is a very, very critical thing to do. The PIA is responding to some of the issues that we have about that, but it’s like a typical transition”.
On his part, the Governor of Ondo State, Rotimi Akeredolu, said failure to receive any revenue from the oil and gas sector in the month despite the high price of crude oil and gas at the international market meant that the country was bankrupt.
The governors insisted that the petrol subsidy must be removed if the country is to benefit from the rising oil price.
Nigeria presently imports virtually all its petroleum products following years of neglect for its refineries located at Port Harcourt, Warri and Kaduna. The refineries are currently under rehabilitation.
