Why FAAC meeting ended in a deadlock yesterday, by finance minister
The Minister for Finance, Mrs. Kemi Adeosun, says the Federation Accounts Allocation Meeting (FAAC) ended in a deadlock on Wednesday in Abuja, because the figures proposed by the NNPC were unacceptable.
A statement issued by Mr Oluyinka Akintunde, her Special Advise, Media and Communications, said Adeosun gave this explanation on Thursday in Abuja, at the 89th Meeting of the National Economic Council (NEC).
The minister said that in her capacity as the Chairman of FAAC, she briefed the governors on the deadlock in the Federation Account in May.
She also said that the Nigerian National Petroleum Corporation (NNPC), was operated as a business and returns were expected from it.
“I gave an account that I give every month on the balances in our Excess Crude Account (ECA) and the Stabilisation Account.
“Items to note in the ECA are that in May 2018, we had an additional credit of 80.6 million dollars that accrued into it.
“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 deadlock yesterday and we really felt the figures that the NNPC proposed for FAAC were unacceptable.
“We felt that some of the costs could not be justified and so we have decided that rather than approve the accounts, we will go back and do further work.’’
Adeosun, however, said that further negotiations and interactions were presently ongoing with the NNPC.
She added that President Muhammadu Buhari and Vice President Yemi Osinbajo were also briefed on the deadlock asking for their support and their forbearance on the issue.
The minister said that this was because the consequence was that workers’ salaries may be delayed in many states as a result of the deadlock.
“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.
“In particular, now that the oil price is now 76 dollars per barrel in the spot market which means that bonny light is about 78 dollars per barrel, 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.’’
Adeosun said it was a very important point underscored by all the governors, adding that they really wanted action taken.
She also said that they are fully in support of the positions of the Ministry of Finance and the Commissioners of Finance not to approve the accounts until they got further explanations on some of the cost being implemented.
On the issue with NNPC, the minister said based on oil price and oil quantity you could calculate what to expect to see in the federation account and if the figure was less, the right question any stakeholder must ask was why?
“So, we have been going back and forth with NNPC to try and understand these figures before we can accept them.
“Remember that the FAAC figures have to be formally accepted by FAAC 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, Ministry of Finance, Office of the Accountant-General of the Federation, Central Bank of Nigeria (CBN), and the NNPC.
“We hope to be able to convene FAAC within the next few days,’’ she said.
She, however, gave the balances in the ECA to be 1.91 billion dollars, stabilisation account N18.89 billion and Natural Resources Account to be N133.71 billion.
The News Agency of Nigeria (NAN), reports that for some months now, FAAC participants have been experiencing difficulties in agreeing with figures because of revenue remittance discrepancies. (NAN)
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