A leading public finance advocacy group has strongly defended President Bola Ahmed Tinubu's recent approval for the reconciliation and removal of certain legacy balances belonging to the Nigerian National Petroleum Company Limited (NNPC) from the Federation Account.
Claims Dismissed as Unfounded and Misleading
The Centre for Energy Governance and Public Finance Accountability has categorically rejected allegations made by the African Democratic Congress (ADC). The ADC had claimed that the presidential directive violated the Nigerian Constitution and deprived state and local governments of rightful revenue.
Addressing the media in Abuja, the group's Executive Director, Dr. Julius Osagie Eromonsele, described the claims as baseless. He clarified that the balances in question were not fresh revenues but decades-old accounting entries that had accumulated over time.
"It is crucial to note that the balances in question are not recent revenues generated under the current administration," Eromonsele stated. "They are long-standing legacy entries accumulated over decades, many of them arising before the enactment of the Petroleum Industry Act."
Origin and Resolution of Disputed Figures
Dr. Eromonsele explained that these contentious figures originated from historical disputes, including unresolved production sharing contracts, obligations linked to the old fuel subsidy regime, royalty disagreements, and reconciliation gaps between the NNPC and various regulatory bodies.
He emphasized that repeated audits had flagged these entries for their lack of accuracy and legal enforceability, yet they remained on the books, creating unrealistic expectations of revenue.
The reconciliation process, which was formally presented to the Federation Account Allocation Committee (FAAC), led to the removal of approximately $1.42 billion and N5.57 trillion from the Federation Account's records. Officials confirmed these figures were either duplicated, overstated, lacked verifiable documentation, or were no longer legally recoverable.
No Cash Lost, Fiscal Discipline Upheld
A critical point stressed by the Centre was that no actual cash was withdrawn from the Federation Account. The exercise was an accounting adjustment to correct long-standing distortions, not a seizure of funds. Eromonsele clarified that existing allocations to states and local governments were not reversed or affected.
"Reconciliation is a recognised public finance practice. It is not the same as cancelling valid revenues," he said. "Rather, it is the process of aligning records to reflect economic and legal reality."
The group also addressed constitutional concerns, arguing that Section 162 of the Constitution applies to revenues lawfully due, not to disputed or extinguished claims. Carrying these false receivables, they contended, weakens the nation's budgeting and fiscal planning processes.
The Centre commended President Tinubu for showing the political will to approve this difficult but necessary step, which aligns with the transparency reforms of the Petroleum Industry Act (PIA). This action, they said, signals Nigeria's commitment to confronting structural weaknesses in its energy revenue management system.
