•Says national oil company underpaid by N185bn
•Statutory revenue, PPT, VAT, others pushed December allocation to N990bn, highest in 2022
•Excess crude account balance now $473,754
Ndubuisi Francis and Emmanuel Addeh in Abuja
A new Federation Account Allocation Committee (FAAC) document has indicated that the Nigerian National Petroleum Company Limited (NNPC) used an exchange rate lower than the Central Bank of Nigeria (CBN) official rate for the sale of domestic crude oil between 2015 and 2022.
The committee disclosed this in a report signed by the Chairman of its Post Mortem Sub-committee (PSMC), Kabir Mashi, a copy of which was seen by TheCable.
It stated that the report was presented to the sub-committee at FAAC’s monthly plenary meeting held on Tuesday, January 17, 2023.
The FAAC sub-committee said it observed some underpayments of N185.45 billion to the federation account as a result of the low exchange rate applied by the NNPC.
“On the exchange rate application by NNPC on domestic crude, FIRS PSC crude and NUPRC royalty crude sale values, the sub-committee observed some underpayments of N185,458,842,270.76 to the federation account as a result of NNPC using exchange rate lower than the CBN official rate on domestic crude sale for the period 2015 to 2022,” the report read.
FAAC also said the CBN has confirmed that, “NNPC did not use the rate advised,” by the bank. It added that the national oil firm has not yet responded to the matter after, “several months of being given the analysis to review.”
It added: “Despite the concerns of FIRS, NUPRC and other stakeholders, NNPC Limited has continued to use a different exchange rate in remittances to the federation account till date.”
The FAAC sub-committee therefore recommended that the plenary should take a decision on the appropriate exchange rate to be used by NNPC Limited on remittances to the federation account to avoid underpayments to the federation account.
The committee also said the plenary should engage a third party forensic auditor to validate the established underpayments to the federation account by the NNPC.
Also, the FAAC sub-committee said it observed that within the post-mandated period, the issue of non-application of mandated rates by the CBN for the months of March, April, and May 2020 resulted in the underpayment to the forex equalisation account by N67. 1 billion.
It stated that it had earlier submitted its report to FAAC and now awaits its investigation with CBN to ascertain why mandated rates were not used during the period.
Meanwhile, a significant rise in Statutory Revenue, Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and Value Added Tax (VAT), among others, pushed distributable revenue among the federal, state and local governments to N990.189 billion for December, indicating the highest monthly allocation in 2022.
The N990.189 billion total revenue distributable for the month of December was drawn from Statutory Revenue of N707.756 billion, N233.277 billion VAT Exchange Gain of N24.841 billion, and N24.315 billion from Electronic Money Transfer Levies (EMTL).
This translated to N88.136 billion increase over the sum of N902.053 billion shared in the preceding month of November.
The second highest allocation in 2022 was N954.085 billion, shared in July.
Citing a communique issued after the first FAAC meeting in 2023, where the December 2022 allocations were distributed, the Director (Information/Press), Federal Ministry of Finance, Budget and National Planning, Phil Abiamuwe-Mowete, in a statement, said the committee shared a total sum of N990.189 billion to the three tiers of government.
A breakdown showed that the federal government received N375.306 billion, the states received N299.557 billion, while the local government councils got N221.807 billion.
The oil producing states got N93.519 billion as 13 per cent Mineral Revenue under the Derivation Principle.
The gross revenue available from VAT for the reference month was N250.512 billion from which the sum of N7.215 billion was allocated to the North East Development Commission (NEDC) Project while N10.020 billion was for cost of collection to the Federal Inland Revenue Service (FIRS) and
the Nigeria Customs Service (NCS).
The remaining sum of N233.277 billion which was distributed as N34.992 billion, N116.639 billion, and N81.647 billion to the federal, state and local governments respectively.
The sum of N24.315 billion from the Electronic Money Transfer Levies (EMTL) was distributed to the three tiers of government as follows; the federal government, N3.648 billion; states, N12.157 billion, and local government councils, N8.510 billion.
It also emerged that N24.841 billion from Exchange Gain was shared in the proportion of N11.562 billion, N5.864 billion, N4.521 billion to the federal, state and local governments respectively while N2.894 billion was for 13 per cent Mineral Revenue.
However, while Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and Value Added Tax (VAT) recorded significant increases in the reference month, Import Duty decreased considerably while Oil and Gas Royalties and Excise Duty increased marginally.
The balance in the Excess Crude Account (ECA) as at January 17, 2023 stood at $473,754.57
