New NNPC: Federal Govt Yet To Agree On Modality For Revenue Remittance

Despite the formal commercialisation of the Nigerian National Petroleum Company (NNPC), the federal government is yet agree with the oil company on modalities for the remittance of revues due to the federation from operations of the new NNPC.

By nature of its commercialization, NNPC will be paying royalties, dividends and taxes to the government. Speaking during the public consultation forum on the 2023-2025 Medium-Term Fiscal Framework in Abuja yesterday, minister of Finance, Budget and National Planning, Zainab Ahmed said while the revenue might not be monthly, “we will work out an arrangement with NNPC on how this will be paid.”

The minister said it is possible to work out an arrangement where the payment could be monthly or quarterly. The finance minister said the federal has been discussing with NNPC. She said a transition committee has been set up of which she is a member.

Days after the entity was commercialised by President Muhammadu Buhari, the minister said her committee was yet to reach the terms of the relationship between government and the new NNPC, including the landing on how remittances will be made. She told stakeholders that thronged the main auditorium of the Ministry of Finance that the committee still has about two meetings with the NNPC and the Federation Account Committee to come up with a framework for revenue remittances to federation account.

“The new arrangement requires that NNPC will not be contributing to FAAC on a monthly basis. But NNPC will still be paying taxes, royalties and dividends. And we will be engaging the NNPC on how we expect these incomes to come to the federation. We can negotiate that these remittances are done on a quarterly basis for example,” she stated.

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Asked why has NNPC not been remitting revenues to the federation account, Ahmed said “because NNPC has been instructed to cover the cost of fuel subsidy on behalf of the federation. So, NNPC is not paying the fuel subsidy on its account, it’s on the account of the federal government.”

She explained that NNPC has been funding fuel subsidy on behalf of the federation. “So, it’s on the cost of the federation. Even though they are the one paying it, we are paying them from what they generate. So, when they generate revenue, instead of remitting it, they use part or all of the revenue to fund the fuel subsidy,” Mrs Ahmed said, adding that “That has been the arrangement and that is what will continue to be in place until we exit the fuel subsidy as a nation.”

Meanwhile, the minister has also clarified that NNPC has not been privatized. She said “NNPC is owned by the federation 100 per cent. Ministry of Finance and Ministry of Petroleum Resources are the two shareholders. It’s still a government owned enterprise, it’s not privatized.”

Group managing director of NNPC Mele Kyari had announced that NNPC would become a fully private company after the unveiling of the new NNPC.