- PMB intervenes as Excess Crude Account hits $1.916bn
BY COBHAM NSA, ABUJA – The botched Federation Account Allocation Committee (FAAC) meeting for the month of May 2018 may reconvene within the next few days following President Muhammadu Buhari’s intervention in the disagreement between FAAC and the Nigerian National Petroleum Corporation (NNPC).
This is even as the Minister of Finance, Mrs Kemi Adeosun said despite the failed meeting, the good news is that an additional credit of $80.6 million accrued into the excess crude account for the month under review.
Speaking on the botched meeting in Abuja on Thursday, Mrs Adeosun said forbearance was sought from all parties so that the required accurate figures could be arrived at before proceeding with sharing the monthly allocations to the three tiers of government.
She explained that the “State Governors and the Federal Government are all in agreement that we need to get to the bottom of these figures.”
According to her, “the FAAC figures have to be formally accepted by the Federation Account Allocation Committee and we were simply not comfortable with the quantum of some of the deductions made and therefore we could not approve those figures.
“As we speak, there is an interface going on between the Commissioners of Finance Forum, Federal Ministry of Finance, Office of the Accountant General, Central Bank of Nigeria and the NNPC. We hope to be able to convene FAAC within next few days.”
The Minister, who acknowledged that disagreements had frequently disrupted the monthly FAAC disbursements, said “I gave an account that I give every month on the balances in our Excess Crude Proceeds Account and the Stabilization Account. Items to note in the Excess Crude Account is that in May 2018, we had an additional credit of $80.6 million that accrued into the excess crude account.”
Mrs Adeosun stated that Governors have been briefed on the current deadlock in the Federation Account, adding that; “So further negotiations and interactions are going on with the NNPC as we speak.”
“However, we did briefed both Mr. President and Mr. Vice President on the deadlock and asked for their support and their forbearance in this because of the consequence which is that workers’ salaries might well be delayed in many States as a result of this. In order to get the accurate figures that we need, we have asked for forbearance and the State Governors and the Federal Government are all in agreement that we need to get to the bottom of these figures”, she said
“For the purpose of this briefing, we operate NNPC as a business. We have invested public capital in that business and we have expectations of return and when that return falls lower than our expectations then the owners of the business, which in this case is the Federal Government and States, need to act. So, that was what caused the deadlocked yesterday and we really felt the figures that the NNPC proposed for FAAC were unacceptable. We felt that some of the costs couldn’t be justified and so we have decided that rather than approve the accounts, we will go back and do further work.
“In particular, now that the oil price is now $76 per barrel in the spot market which means that bonny light is about $78, we want to aggressively set aside money in the excess crude account. So, we are very conscious that this period, this window of relatively high oil price might not last and we would like to be able to save. If we cannot get into the Federation Account the sort of revenues we are expecting then we will not be able to save.”
Mrs Adeosun said with all the Governors underscoring the point, “they really want action taken and they are fully in support of the positions of the Federal Ministry of Finance and the Commissioners of Finance not to approve the accounts until we get further explanations on some of the cost being implemented.”
she further stated that; “Based on oil price, oil quantity you can pretty much calculate what you are expecting to see in the Federation Account and if the figure is less, then the right question that any stakeholder must ask is why?”
Mrs Adeosun expressed worry over the seeming back and forth game with the NNPC, insisting that all the stakeholders are trying to understand the contentious figures before finally endorsing them as the appropriate figure to share for May 2018.
However, the Minister disclosed that notwithstanding recent developments, balances in the Excess Crude Account is $1,916,742,289.60; Stabilization Account – N18,892,864,216.65; and Natural Resources Account – N133,715,427,387.37.
