FORUM of Finance Commissioners at the weekend explained why states have rejected contribution of Nigerian National Petroleum Corporation (NNPC) for May 2018 on three different occasions that Federation Account Allocation Committee (FAAC) had met in the last one month.
Chairman of the forum and Adamawa State Commissioner of Finance, Mr Mahmood Yunusa who spoke with finance reporters in Abuja at the weekend said states were determined to ensure that proper account reporting procedures were adopted by NNPC and other revenue generating agencies.
According to him, the law mandates NNPC to remit petroleum royalties through Department of Petroleum Resources (DPR) to federation account and remit petroleum profit tax (PPT) through Federal Inland Revenue Service (FIRS).
He also disclosed that FIRS remittance to the federation account for June 2018 was short by N90 billion when compared with the previous month.
“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 we are also trying to adopt. It is there, it is part of the law under oil and gas, like in any other international oil company (IOC), that all royalties should be collected and remitted to the federation account by the DPR, it is DPR’s responsibility.
“Before DPR collect that royalty, 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.”
“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.”
He, however, expressed optimism that the issued would be resolved soon when top management staff of NNPC return from their trip to Britain where they went to sign the NLNG contract.
*From the feelers that we have gotten, the top management of the NNPC are out of the country for a meeting, by the time they return, all these things will be put to order.
“It’s just fair that if such decision should be taken, it should be in a joint session that will involve the Governor’s Forum, the Ministry of Finance, the NNPC as well as the Forum of Finance Commissioners.
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“We are on course towards solving all the problems and we are focused”, he explained.
On the claim by NNPC that it was trying to exit the Joint Venture Cash-Call (JVC), thus resulting in shortages, Mahmood said forum of finance commissioners has very experienced people including professional accountants, some of whom have worked in the NNPC.
“What is JVC -it is a joint Cash Call – it is for me to bring x amount of money while the other partner also brings x amount of money to do a business.
“So I need to know what am I contributing and I equally need to know what the other party is contributing.
“If I am contributing a JV, I am investing and every investment there should be the return on investment.
“If there is no return in investment why should you invest? Why should government company invest?
“Is it because it is not your personal company? Government company is your company and it should even invest more than you because your personal company could be restricted just for you and your immediate family.
“But government company, if it is well sustained, well maintained, well invested and well managed, it could serve even people that are yet unborn and it will keep on driving development in the country.”
On FIRS, Mahmood said the disputed FAAC report shows a sharp drop in FIRS’s May and June collections but there was no opportunity to engage the FIRS for the explanation on why there was a sharp drop of about N90 billion.
“So FIRS also need to tell us why the sharp drop”, Mahmood declared.
and then