Three federal revenue-generating agencies – the Nigerian National Petroleum Company Limited (NNPCL), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Federal Inland Revenue Service (FIRS) are in the process of reconciliation with the Federation Account Allocation Committee (FAAC) over a shortfall of N1.7 trillion in the February inflow.
The shortfall was traced to these agencies by the Post-Mortem Sub-Committee (PMSC) of the FAAC in its March report.
The report stated that “the total unresolved amount due to the Federation Account from the reconciliation meeting held with the Revenue Generating Agencies in March, 2024 was $36,329,376.24 or N1,782,608,213,106.87
“The Nigerian National Petroleum Corporation (NNPC) Limited and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), owe N1.1 trillion ($35.7 million).”
The FIRS is in deficit of N665.5 billion ($0.6 million).
The report did not specify the cause of the shortfall, but it said there is an ongoing reconciliation efforts between the revenue generating agencies and the PMSC.
These efforts aim to resolve the discrepancies and ensure all due funds are paid into the Federation Account.
However, Chairman of the Revenue Mobilization Allocation and Fiscal Commission (RMAFC), Mohammed Shehu told The Nation that “the actual amount of the shortfall will be determined after reconciliation. What usually happens is the distribution of maybe two months ago comes in late because the data and all these reconciliations have not yet taken place.
“So, of course you know what we went through in the last administration, some of these things are bound to happen and we are trying to prevent this kind of situation. All the parties involved are trying to work things out.”
The PMSC report highlighted some progress in recovering outstanding funds.
It was able to reconcile and confirm payment of over N106 billion ($101.3 million) from previous arrears in January.
This included: N441.5 million from NNPCL related to November 2023 crude oil and gas revenue; over N61.7 billion from NUPRC for royalty payments from October/November 2023 and N44.2 billion from NUPRC for GVC Forcados/Brass Terminal revenue.
The report also mentioned that outstanding payments from before June 2023 are being handled by a separate “Stakeholders Alignment Committee”.
The report revealed an ongoing disagreement between the NNPCL and the Central Bank of Nigeria (CBN) regarding the appropriate exchange rate to be used for revenue calculations.
The CBN sets the official exchange rate, but the NNPCL reportedly used a “weighted average rate” for some calculations in 2023.
According to the report, “the sub-committee further analyzed the implication of the use of the weighted average rate on PMS importation and discovered that the Exchange Rate Differential from June to December, 2023 was N937, 961,442,969.83 contrary to NNPCL claim of N1, 675,920,811,819.
“The sub-committee resolved that NNPCL should reconcile the PMS exchange rate differentials for the period June to December, 2023 and also provide authorisation for the use of weighted average exchange rate.”
The unremitted funds represent a significant shortfall for the Federation Account, which is used to distribute revenue among the federal, state, and local governments.
The shortfall could impact government spending plans and budgets across the country.
The outcome of the ongoing reconciliation and the resolution of the exchange rate dispute will be crucial in determining the final amount recovered by the Federation Account.
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