To check the controversy associated with the Nigerian
National Petroleum Corporation (NNPC) remittances into the Federation Account,
stakeholders in the Federation Account Allocation Committee (FAAC) are moving
to stop the state oil company from collecting and remitting royalties accruing
from oil.
The move, largely championed by the states,
represented in FAAC by the commissioners for finance is considered a potent way
of checking the recent frequent deadlocks at FAAC meeting occasioned by the
rejection of NNPC remittances.
Controversies surrounding alleged under-remittance by
NNPC had culminated in five inconclusive FAAC meetings this year alone-three of
them occurring between June 27 and July 12.
FAAC membership comprises minister of finance (chairman),
commissioner for finance of each state in the federation; two persons appointed by the president, the Accountant-General of the Federation, and
the permanent secretary in the Federal Ministry of Finance or such officer as
may be designated by the minister shall
be the secretary to the committee.
The Chairman, Commissioners for Finance Forum, Mr.
Mahmoud Yunusa, disclosed in an interview in Abuja at the weekend that part of
the move to put in place a more credible process was to strip the NNPC of the
power of collecting oil royalty and transfer same to the Department of
Petroleum Resources (DPR) while the Federal Inland Revenue Service (FIRS)
handles Petroleum Profit Tax (PPT) as was the practice in the past. .
"Part of the process of strengthening the system
will be to take the collection and remittance of royalty from NNPC to the
Department of Petroleum Resources (DPR) while the collection and remittance of
PPT will also be returned to the FIRS in line with the law.
"This is part of the process that we are trying
to strengthen and adopt. It is there, it is part of the law under oil and gas,
like in any other IOC (International Oil Company), that all royalties should be
collected and remitted to the Federation Account by the DPR. It is DPR's
responsibility. Before DPR collects that, it has to make sure that the actual
amount that is supposed to be remitted is remitted.
"If it is under-remitted, the DPR will be
responsible for the shortfall, and I know DPR would not want to be responsible
for a shortage that they are not even aware of.
"If you are supposed to remit X billion naira,
and you remit B billion naira to them, they won't accept because it is
under-remitted. The royalty is calculated and paid based on the oil lifted, the
same thing with PPT.
“The NNPC has to remit the same amount that has to
be remitted to FIRS, if not, the FIRS will not accept because they would not
want to be responsible for the shortfall or under-remittance that ordinarily
they shouldn't be responsible. So that will balance the revenue collecting
system.
"There should be a kind of checks and balances.
Had it been we had this, this issue wouldn't have cropped up. That is the
system we are trying to strengthen and adopt," he said.
On whether royalty and PPT are the only two issues
the federation account was looking at addressing, Yunusa answered in the
affirmative, adding: "If you are running a company and then you see that
you are having a kind of bumps, potholes on the way and a lot of things are not
very clear to you, you could expand the horizon of your checks. But for now, we
want these two to be addressed and respected.
"If the NNPC remits its royalty and remits its
PPT, it can't come to FAAC and say we are contributing zero amount to the
federation. If they say they are contributing zero and may be they get away
with it that month, the following month would it come and say it is
contributing zero?
"Their conscience will not allow them. Let's
even assume they have the guts to do it the second month, how long will it
continue? But don't forget both the first and second month, we are getting our
royalty and PPT intact, but what is its own worth of doing business? What value
has that added to the Federation Account and what value have they added to
Nigeria?" Yunusa queried.
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