16 July 2018, Sweetcrude, Lagos — The Finance Commissioners’ Forum of the Federation Accounts Allocation Committee, FAAC have asked the government to strip the Nigerian National Petroleum Corporation, NNPC of the responsibilities to collect and remit oil royalties and petroleum profit tax, PPT.
Chairman of the Forum, Mahmood Yunusa, revealed this to reporters in Abuja while discussing how to proffer solutions to the lingering crisis in the monthly revenue remittances by the NNPC.
According to him, the group wants the responsibility of collecting and remitting oil royalty to be returned to the Department of Petroleum Resources, DPR, as stipulated under the petroleum industry law, while the collection and remittance of the PPT should be returned to the Federal Inland Revenue Service, FIRS in line with the law.
Royalty is usually collected by government or mineral rights owners, either in cash or oil, from licensees based on the percentage of gross production. Oil royalty is calculated and paid based on the volume of crude oil lifted.
PPT is charged based on the income of oil companies engaged in upstream petroleum operations.
Controversies surrounding alleged under-remittance by NNPC had culminated in five inconclusive FAAC meetings this year alone-three of them occurring between June 27 and July 12.
FAAC membership comprises minister of finance (chairman), commissioner for finance of each state in the federation; two persons appointed by the president, the Accountant-General of the Federation, and the permanent secretary in the Federal Ministry of Finance or such officer as may be designated by the minister is the secretary to the committee.
Explaining further, Mr. Yunusa said the request to take away the responsibilities from the NNPC was reached as part of the process to ensure an end to the crisis which recently bedeviled revenue remittances by the NNPC to the FAAC.
“DPR will ensure the actual amount for royalty is collected and remitted. If there is under-remittance, the DPR will be responsible for the shortfall.
“On PPT, the NNPC has to remit the same amount to be remitted to FIRS. If not, the FIRS will not accept, because they would not want to be responsible for the shortfall or under-remittance,” Mr. Yunusa said.
“If the NNPC remits its royalty to the DPR and PPT to the FIRS, it cannot come to FAAC o claim nothing was contributed to the federation,” he noted.
Explaining why the FAAC meeting canceled three times, Mr. Yunusa said it was as a result of government’s inability to get the NNPC management to reconcile the accounts, adding that the proposal on the NNPC’s role in royalty and PPT collection would be resolved once its officials were back in the country.
“It’s just fair that if such decision should be taken, it should be in a joint session involving the Governor’s Forum, the Ministry of Finance, the NNPC as well as the Forum of Finance Commissioners,” he said.
On plans by FAAC in March this year to hire forensic auditors and consultants to work with the NNPC on the revenue records, the chairman said the plan remains.
According to him, FAAC members were not convinced by NNPC’s claims that its inability to remit sufficient revenue for distribution among the three tiers of government was as a result of its plan to exit the Joint Venture Cash-Call.
NNPC’s spokesperson, Ndu Ughamadu, had claimed that the N147 billion remitted for sharing for June came after deductions for certain operational obligations, including payment for JV cash calls.