As the Federation Account Allocation Committee meets for the first time in 2022 on Wednesday, there are significant indicators that state and federal governments are once again at odds.
Officials from the state, speaking to our correspondents on Sunday, criticized the Nigerian National Petroleum Corporation’s continuous diversions from FAAC monies to support fuel subsidies, stating that the issue would be discussed at the meeting on Wednesday.
On Wednesday, the NNPC was set to remove N270.83 billion from the January FAAC allocations, which would be divided by state, federal, and local governments.
Asuquo Ekpenyong, Junior, the Cross River State Commissioner for Finance, verified to one of our correspondents that the FAAC meeting will take place between Wednesday and Thursday.
In its December 2021 report to the FAAC, the NNPC announced that it will deduct some monies as a value shortfall sustained by the oil company in January 2022.
During the FAAC meeting in January, the company said it would subtract N270.83 billion from the amount to be split by the three tiers of government.
It said, “The estimated value shortfall of N270,831,143,856.56 is to be recovered from December 2021 proceed due for sharing at the January 2022 FAAC meeting.
“This value shortfall consists of N220,110,853,427.56 for November and N50,720,290,429.00 deferred for recovery in December 2021 FAAC report.”
Deductions unjustifiable – Delta
Speaking ahead of the FAAC meeting, the Delta State Commissioner for Finance, Mr. Fidelis Tilije, in an interview, said that the Finance Commissioners’ Forum had made a series of conclusive resolutions on the deductions by the NNPC to finance fuel subsidy.
According to him, state governments will continue to oppose the deductions, which he described as non-transparent.
Tilije, who chaired the finance commissioners forum’s committee on the Petroleum Industry Act, said, “The issue of removal of fuel subsidy is the Federal Government’s responsibility and not FAAC responsibility.
“Ours is to look at sources of funding and expenditure. We have made a series of conclusive resolutions on the need for subsidy to be removed on one angle and secondly to also check the NNPC because we don’t know who is checking on what kind of subsidy they are paying.
“Because they are the one collecting the subsidy and they are the one spending it. Those issues have been queried, of course, the Federal Government is in charge of the NNPC and the NNPC also behaves like a law. Until the Federal Government can take a decision on the issue of subsidy and there is nothing anybody can do.
“But unfortunately the Federal Government is also saying that it will need the state governors to guarantee the wellbeing of the people and ensure that there is no labor strike in their various states before they can remove subsidy. Who does that?”
When asked about the stand of states ahead of Wednesday’s meeting, he stated, “We have always been kicking against it (deductions for subsidy) and we will continue to kick against it, what we are saying is that the subsidy they are paying cannot be justified.
“We don’t know the exact figure we are consuming on a daily basis but their own argument is that now the price of crude oil has gone up and if you sell the crude oil at a high price and import petrol, you will have to be buying the petrol at a high price but for me, it is not true.”
It’s injustice against Ekiti – Commissioner
On his part, the Ekiti State Commissioner for Finance, Akin Oyebode, expressed the opposition of the state government to the deduction of money for fuel subsidy from the Federation Account without the consent of states.
Oyebode, who said he could only speak for his state, said such deductions, which exemplified the country’s flawed fiscal federalism, amounted to injustice to some states including Ekiti.
The commissioner said, “I have been on record at the various Federation Accounts Allocation Committee meetings to state my vehement opposition to the continued deduction of subsidy without subjecting it to the consent of the states”.
He suggested two options for the Federal Government to resolve the issue going forward.
Oyebode said, “The issue is very clear, if the Federal Government decides in its wisdom to operate the subsidy on petroleum products without getting the consent of states, then it should bear the cost of the subsidy 100 percent and that cost should be taken from the Federal Government’s share of the Federation Account, not deducted at source from the Federation Account.
“And in the event that we, as a country, agree to continue with the subsidy regime, then the deduction should be made in line with the consumption of petroleum products in each state.
“A situation where Ekiti, for example, that consumes less than one percent of petroleum products gets a deduction of N3bn a month, is a significant loss to Ekiti. We could have used that money to meet all sorts of different demands from our people.
“We believe that this is again another example of the flawed fiscal federalism structure that we operate. Of course, this subsidy request has been tabled at FAAC, all we get at the meetings are reports of deductions taken at the source which I very strongly believe are even unconstitutional because these are not subject to appropriation.
“The Nigerian National Petroleum Corporation, in its wisdom, just comes and reports that this is how much was taken and they call it some funny names, but we know what it is – deductions for subsidy.”
Oyebode said that a curious aspect of the whole thing was that “there is even no basis for interrogating if in truth the volume of products on which subsidy had been charged had actually even got to the consumers.”
We are not in charge of Subsidy – NNPC
But when contacted, the spokesperson of the NNPC, Garba-Deen Mohammad, told our correspondent that the issue of petrol subsidy was beyond the control of the oil firm.
He stated that with the advent of the Petroleum Industry Act, the matter of subsidy was outside the control of the NNPC but was a matter being handled by the Federal Government.
Garba-Deen said, “Subsidy is not under the control of the NNPC. The subsidy is now a PIA issue and it will be determined by the principles of the Petroleum Industry Act. Not by the NNPC.
“The NNPC is an operator now in the market, just like Shell or Chevron or like any other oil company. So I don’t know anything you are talking about.”
When probed further on whether petrol subsidy would be stopped, replied, “We are speaking the same thing, I say I don’t know. I have no idea, I am just an employee of the NNPC.”
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