An energy policy and public finance advocacy group has stepped forward to defend 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 Ltd) from the Federation Account. The group has dismissed claims that the action is unconstitutional or harmful to the finances of states and local governments.
Clearing the Air on Disputed Balances
The Centre for Energy Governance and Public Finance Accountability (CEGPFA) made its stance public during a press conference held in Abuja on Friday. The group's executive director, Dr Julius Osagie Eromonsele, addressed the event at the Transcorp Hilton, labeling the criticisms from the African Democratic Congress (ADC) as misleading.
Eromonsele clarified that the balances in question are not fresh revenues from the current administration. Instead, they are long-standing accounting entries that accumulated over several decades, with many originating before the enactment of the Petroleum Industry Act (PIA).
He detailed that these disputed figures stem from a complex history of unresolved issues, including:
- Production sharing contract disputes.
- Domestic crude supply obligations linked to the old fuel subsidy regime.
- Disagreements over royalty assessments.
- Persistent reconciliation gaps between NNPC Ltd, regulators, and revenue agencies.
A Structured Reconciliation Process, Not Arbitrary Write-off
Responding to allegations of an arbitrary presidential directive, Eromonsele emphasized that the approval followed a structured reconciliation process involving relevant fiscal and regulatory institutions. The outcomes of this process were presented to the Federation Account Allocation Committee (FAAC).
The official reconciliation revealed that approximately $1.42 billion and N5.57 trillion were identified for removal from the Federation Account records. These amounts were categorized as duplicated, overstated, lacking verifiable documentation, or no longer legally recoverable. The exercise was strictly applied to legacy balances accumulated only up to December 31, 2024.
"This should not be interpreted as the cancellation of valid revenue," Eromonsele stated. He described the move as a standard public finance practice aimed at aligning accounting records with legal and economic reality. He further assured that no cash was withdrawn from the Federation Account and that allocations already disbursed to states and local governments were not reversed.
Constitutional and Fiscal Justifications
Addressing the constitutional concerns raised by the ADC, the centre argued that Section 162 of the Constitution pertains to revenues that are lawfully due and payable, not to disputed or extinguished claims without legal backing. The group warned that maintaining inflated receivables on the books undermines fiscal discipline, budget credibility, and revenue predictability for subnational governments.
The CEGPFA also noted that the reconciliation is consistent with the reforms ushered in by the Petroleum Industry Act, which transformed NNPC Ltd into a commercial entity required to operate under international accounting and reporting standards.
While acknowledging the political sensitivity of the decision, the group stated that President Tinubu's approval reflects a commitment to fiscal accuracy over convenient but misleading revenue projections. They urged all political actors and stakeholders to engage with the issue responsibly and support reforms designed to enhance transparency and accountability in managing Nigeria's energy revenues.
