A Review of the Nigerian Energy Industry

Fuel subsidy stalemate stalls Nigeria’s federal allocation

19 October 2011, Sweetcrude, Abuja – Nigeria’s Federation Account Allocation Committee (FAAC) Tuesday failed to make the monthly revenue allocation to the three tiers of government for the month of September following disagreements over fuel subsidy deductions by the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Products Pricing Regulatory Agency (PPPRA).

The development has resulted in an indefinite postponement of the September allocation.
Addressing journalists on the issue, Chairman, States Commissioners of Finance, Mr. Eze Echesi, said the states had expressed discontent over the monthly expenditure on subsidy which the NNPC and PPPRA have often tendered to the committee.

A report by the sub-committee set up to look into NNPC’s indebtedness to the federation account had expressed concerns about both agencies’ disregard for subsidy deduction limits as stipulated by law.

NNPC was in the report accused of over-shooting the amount of crude oil it was permitted by law to produce.

“You know for FAAC meeting to take place, there is usually information which we have to agree with by the various stakeholders for it to go on. And the technical session of FAAC is one of those critical meetings before the main plenary session which is for today.

“Now, the accountants general of the various states that make up the Federation Account had their technical meeting today and had unresolved issues among which are the issue of fuel subsidy deduction.”

“The commissioners of finance of the states who are represented here are not so much for fuel subsidy removal or not. It will be decided by this nation. But we are concerned about deductions which are outrageous which we don’t consider comfortable because the funds that are being deducted on subsidy belong to the nation; belong to the Federation Accountant; belong to the three-tiers of government. So that is the issue.

“So, having not agreed with those levels of deductions that means we’ve not agreed with some of the information critical for FAAC to take place and that was why the meeting was postponed,” Echesi said.

But later on in her office, Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, while responding to questions on why the revenue sharing was stalled said: “What is happening is that there are technical meetings as you all know before the FAAC. During these technical meetings issues arise. They could be issues of: Do we agree what are we going to be sharing this month?
Are there questions as to what should be going for fuel subsidy? Are there questions regarding augmentation?

“So, those questions sometimes generate debates between the commissioners, the minister and the Accountant General of the Federation among themselves. And that is what is happening now that the technical discussions looking at how much is being presented for sharing, how much is being looked at for subsidy or no subsidy is being debated and this is always the case.”

According to her: “Sometimes, they don’t always agree on the amount and sometimes they do. When they do, things go smoothly and when they don’t, they say can we go and discuss amongst ourselves and they have been doing that. And then for the FAAC to happen, it is going to happen a little bit later. That is what is going on.”

NNPC had reportedly deducted N100 billion for subsidy, while N131 billion was also deducted by PPPRA in the figures presented to FAAC. The deductions were said to be above what was permitted by law.

In this article

Join the Conversation