Nigeria may face more dire times following the projection of a deflated revenue for the three tiers of government, federal, states and local governments as the Nigerian National Petroleum Corporation (NNPC) battles to cover for subsidy on petrol while it has warned monthly remittance to the federation accounts allocation committee (FAAC) for May will be zero.
Katsina State Governor Aminu Bello Masari has warned that the insecurity in the country may be escalated if the Federation Account Allocation Committee fails to share allocations to state and local governments in May.
Advertisement
In a letter by the corporation to the Accountant-General of the Federation (AGF), Mr. Ahmed Idris,
NNPC said it posted a value shortfall of N111.966 billion in February 2021, which will ultimately impact on its ability to contribute to the joint account shared by the federal, state and local governments.
A copy of the letter, signed by the corporation’s Chief Financial Officer, Mr. Umar Ajiya, and dated April 26, 2021, was obtained and quoted in several media outlet.
The minister of finance, budget, and national planning; the director-general, Nigeria Governors’ Forum; the director, home finance; and the chairman, Commissioners of Finance Forum were copied.
Also, Katsina State Governor Aminu Bello Masari spoke to newsmen in Abuja on the danger of the projected zero allocation to FAAC from NNPC; similarly, an ex-lawmaer Dino Melaye also warned on the consequences of the subject matter in a video posted on his social media handles .
“Without resources, again, it’s another factor that affects security, you cannot create jobs for the teeming unemployed youths in the rural communities…It’s with resources state governments and local governments we’ll be able to contain some of these restive youths so that they can be used for better purposes because most of them might be foot soldiers to the bandits.” MASARI
Advertisement
View this post on Instagram
Implication of Zero from NNPC:
The implication is that the zero remittance from the NNPC may affect the monthly allocation to states, which may ultimately struggle to meet their statutory obligations, including payment of salaries and pensions.
The NNPC, in the letter, attributed the N111.966 billion shortfall to the rising average landing cost of petrol, which jumped to N184 per litre in March as opposed to the existing N128 ex-coastal price.
According to the corporation, the N111.966 billion incurred as landing costs would be deducted from April oil and gas proceeds due to the federation in May.
It stated: “Further to our previous correspondences on the above subject, we wish to advise on the projected remittance to the Federation Account for the months of April (May FAAC) to June 2021 (July 2021 FAAC).
“The accountant-general of the federation is kindly invited to note that the average landing cost of petrol for the month of March 2021 was N184 per litre as against the subsisting ex-coastal price of N128 per litre, which has remained constant notwithstanding the changes in the macroeconomics variables affecting petroleum products pricing.
“As the discussions between government and the labour are yet to be concluded, NNPC recorded a value shortfall of N111, 966, 456, 903.74 in February 2021 as a result of the difference highlighted above.”
The corporation said a projection of remittance to the Federation Account for the next three months had been sent to the Office of the Accountant-General.
It added: “Accordingly, the AGF is invited to note that the sum of N111,966,456,903.74 will be deducted from April 2021 oil and gas proceeds due to the federation in May 2021, which will translate to zero remittance to the Federation Account from NNPC in the month of May 2021.”
The corporation stated that the move was to ensure the continuous supply of petroleum products to the nation and the guarantee of energy security in the country.
Group Managing Director of the NNPC, Mallam Mele Kyari, had earlier raised the alarm over the rising landing cost of the product, saying that the NNPC could not continue in that trajectory.
Masari: Zero Allocation May Escalate Insecurity Nationwide- Masari
Masara said inability of states and local councils to fund responsibilities might escalate the security crisis in the country.
He said: “Without resources, again, it’s another factor that affects security, you cannot create jobs for the teeming unemployed youths in the rural communities…It’s with resources state governments and local governments we’ll be able to contain some of these restive youths so that they can be used for better purposes because most of them might be foot soldiers to the bandits.”
He said the security situation in Katsina was still of high concern, but added that his administration was doing everything to control it.
Masara also said a declaration of state of emergency on security could not solve the current insecurity the country.
He noted that the military personnel that would be used to execute such emergency situation were already overstretched.
He appealed to Nigerians to stop politicizing security issues, saying policing the nation at this critical time was everybody’s business.
He said Nigeria must not be allowed to disintegrate as such would mean a major crisis for the entire African continent.