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Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Dr. Maikanti Baru

FAAC: How Governors’ Demands  Breach  Agreement With NNPC



By Sadiq Abdullateef

As the showdown between Nigerian National Petroleum Corporation (NNPC) and the Nigerian Governors’ Forum (NGF) over oil revenue remittance and the actual figures of daily consumption lingers, it has emerged that the stalemate   in the Federation Account Allocation Committee (FAAC) meetings in the last two months has been as a result of certain demands by the Nigeria Governors Forum(NGF) which were in breach of existing agreement.

A source close to FAAC who is privy to all the happenings  and and  controversy told DAILY ASSET that the increasing appetite for additional funds by the Governors  with the approach of the 2019 elections was largely responsible for the “unreasonable demands” which even went against the spirit of existing agreements with the NNPC on remittances to FAAC.


The source who spoke on condition of anonymity told DAILY ASSET on Friday  the state governors’ fresh demands of additional N40bn remittance to FAAC  was unrealistic and a breach of the agreement the NNPC had with them.

“It is surprising that after the NNPC had remitted N147bn into the Federation Account in May, the governors are faulting the figure, saying it is a far cry from the expected revenues as the amount does not reflect the current economic realities, daily consumption deductions and prices of oil in the international market”.


“The truth is we are yet to reach the stable period where the daily consumption will come down – we also fuel some neighboring countries and the NNPC made a presentation to Nigerian Customs Service that at the border states (states that have borders with Republic of Benin, Niger Republic, Cameroon), there are more consolidation of filling stations compared to even Lagos”.


“What they normally do is move products to these border states and then move them further to these neighboring countries and Nigerian Customs was invited to the NEC meeting and they denied such things, which is expected because Customs will be seen as not doing their job if they confirmed that but we all know the truth”, the source added.


He further stressed that, the dispute of daily consumptions figures between the DPR and the NNPC has also made matters worst, but “it is also known that DPR is not always on ground to do their job appropriately and during the recent fuel crisis there was a presidential report stating that they didn’t do much, it was the NNPC who took care of things. DPR felt slighted about that report and they see this as an opportunity to fire back at NNPC,” the source said.


“It’s sad now that the governors are saying because of this stalemate, they cannot pay salaries, how many of them pay salaries even when they are getting the FAAC monies? It’s an established fact that because it’s election year, the governors have more demand for funds to aid their campaigns. That’s just it”.


“The most damaging remark about this whole thing is the minister of finance, Kemi Adeosun’s statement that the governors can’t pay salaries with the present state of things. She is part of the executive, so we all expect her to know better. So I think the NNPC’s response that the Chairman of NEC, who happens to be the Vice President, Yemi Osinbajo will resolve the issue is in order”, he concluded.


It could be recalled that the governors had last week called for an audit of NNPC’s petrol importation, claiming daily petrol consumption figures reported by the NNPC were overblown by the corporation so it could keep more money away from FAAC.


The allocations for the months of May and June were not distributed as at when due among the three tiers of government following the rejection of the NNPC remittances.


The FAAC eventually held  on  Friday after several postponements     and a total sum of  N668. 898 billion was distributed  to the three tiers of Government for the month of May, 2018.

The amount is made up of statutory distributable sum of N575.475 billion and N 93.423 billion from the Value Added Tax (VAT).

“Owing to disagreement on remittances by the Revenue Generating Agencies, especially the NNPC, the sharing of revenues for May 2018 that was meant to be distributed in June 2018, was put on hold”, a statement from the Minister of Finance signed by Hassan Dodo said.

The statement said efforts were being intensified to address the “unsatisfactory remittances from revenue generating agencies”.




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