By Bassey Udo
The full implications of the transition of the Nigerian National Petroleum Corporation (NNPC) may yet not dawn on the three tiers of the government until the next meeting of the Federation Accounts Allocation Committee (FAAC) next month.
On Tuesday, President Muhammadu Buhari formally unveiled the new NNPC in Abuja.
The President proclaimed the company as an incorporated public liability entity limited by shares, henceforth under the full regulation of the provisions of the Companies and Allied Matters Act (CAMA).
On August 16, 2021, the NNPC Limited was established by virtue of the signing into law by the
President of the Petroleum Industry Act (PIA), 2021 enactment by the National Assembly.
While performing the unveiling, President Buhari said NNPC’s transformation from a state-owned national oil and gas company to an independent commercially-driven business entity was part of the reforms in the petroleum industry to make it compete favourably with its contemporaries within and outside Nigeria, make profit and declare benefits and interests to its investors.
The new company, the President reminded Nigerians, would operate without any more reliance on government funding, although he said it would be free from government’s institutional regulations, such as compliance with the Treasury Single Account, Public Procurement and Fiscal Responsibility Acts.
To further give clarifications on the status and responsibilities of the new NNPC, the former Group Managing Director of the NNPC, Mele Kyari, who is now the Group Chief Executive Officer told reporters the NNPC would no longer make monthly contributions to the Federation Account Allocation Committee (FAAC) for sharing to the three tiers of government.
“The NNPC is now a private company. We don’t have any business with monthly contributions to FAAC again. Does MTN make contributions to FAAC?” Kyari asked.
“The NNPC’s responsibility will be to pay its taxes, royalties and deliver dividends to its shareholders,” Kyari added.
Pressed to clarify what would happen to the over eight months arrears of the FAAC contributions the NNPC was reported not to have paid as a result of over recovery for fuel subsidy, Kyari said:”Which arrears? That was the Nigerian National Petroleum Corporation. We are the Nigerian National Petroleum Company Limited. Two different entities. Old things have passed away,” apparently suggesting the arrears may never be paid.
FAAC is a statutory Committee composed of representatives of the three tiers of the government, namely Federal, the 36 States of the Federation and 774 Local Government Councils as well as the Federal Capital Territory.
The Minister of Finance is the Chairman, with the Accountant General of the Federation in charge of the Secretariat of the Committee, which meets once every month with other members, including State Commissioners of Finance and their Accountants-General as well as representatives of the various revenue generating agencies, like the Nigerian Customs Service, Department of Petroleum Resources and the Federal Inland Revenue Service (FIRS).
The main purpose of the monthly gathering is to allocate to the three tiers of the government revenues pooled into the Federation Account by the various revenue agencies.
The NNPC was a key member of the Committee, with its contributions from its exports of crude oil and gas, payment of Royalties, petroleum income tax and other activities constituting the bulk of the revenues available for sharing.
With NNPC’s transformation into a public limited liability entity, the implication will be that the amount of revenue usually available for sharing to the three tiers of government would drastically shrink, stirring fresh financial squeeze for the component units of the Federation.