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Excess Crude account falls to N29bn as FG, states share N365.9bn for May

By Oscaline Chimaobi
The Federation Account Allocation Committee (FAAC) has disclosed that it has withdrawn more than N30bn from the Excess Crude Account to make up for payment of allocation among the three tiers of government for the month of May, 2010.

The Minister of State for Finance, Mr. Remi Babalola, who made the disclosure on Tuesday at a briefing with journalists at the end of this month’s FAAC meeting, in Abuja, noted that the government was committed to a prudent macro-economic policies aimed at maintaining low inflation and effective fiscal control.

He said “Substantially, the area of consideration is the statutory allocation for the month. The total money distributed was N403.4bn. When you compare that to what was shared last month (N410bn), there is a little shortfall.

“Even for the N403.4bn for this month, we still had to take N30bn from the Excess Crude for augmentation, which shows clearly that we needed additional funding to meet up to the expected level that we want to have until the new revenue profile is released, which all the members agreed to.

We still used the $67 per barrel, and we still used the actual pending the time that we get the new revenue profile that we, hopefully, will operate with come next month.”

He further noted that the committee had extensive deliberation on the failure of the Nigerian National Petroleum Corporation to pay the N450bn it owes the Federation Account, even as he insisted that the Committee was not being soft on the oil and gas behemoth.

“It was agreed that the NNPC should come by next month to give us with a detailed repayment plan of how it intends to repay the N450bn owed the Federation Account.

“We know that the NNPC has some challenges, but the good thing is that they have accepted that they owe the money, and now we want them to put in writing how they are going to repay the money.”

He said a letter would be written to the Corporation to come before the next FAAC meeting to give “concrete repayment plans,” adding however that there is no guarantee that the NNPC would pay up as soon as possible.

Babalola said, “There are guarantees anywhere. There is no assurance that the NNPC would come up with the money before the next FAAC meeting. But, it is worth noting that FAAC has directed that a letter be written to the Corporation to come with a concrete repayment plan.

“Don’t forget that in the last few months, the Corporation has had some challenges with about three GMDs in less than two year. But we know they are committed to repaying the money, and the new GMD has given us his commitment to meet up with this obligation.”

The minister added that, “The true position of the matter is that NNPC is bleeding. There was a particular month that the NNPC could not pay the money it was supposed to pay into the Federation Account. I mean how can you produce something for N60, for instance, and sell that thing for N40? How can any company survive on that?

“The issue is not about whether they will pay or not, but about whether they are able to pay. This further buttresses the need for full implementation of deregulation as a veritable economic imperative. What is important to FAAC is for NNPC to pay whatever it owes to the Federation Account,” he added.

Meanwhile, the minister had noted that the NNPC had remitted about N1.4 billion into the Federation Account, predicated on the report of the Post_Mortem Committee of FAAC.

“That shows one of the positive developments and signal we get from Post_Mortem sub_committee in terms of revealing what is taking place and ensuring that all revenues are brought back to make sure that all accounts are accurate,” he stated.

Babalola glossed over repeated resort by the FAAC to the Excess Crude Account for the monthly allocation, noting that “the amount withdrawn is not much; we could have as well taken it from the domestic Excess crude account.
The Accountant_General of the Federation (AGF), Alhaji Ibrahim Dankwambo, on his own part, explained that that the depletion of the Excess Crude was also because of the payment of subsidy by the Federal government to the NNPC and other independent oil marketers.

“Like we always said, the Excess Crude is divided into two: the dollar component and the naira component. The dollar component has a balance of $3.2 billion, and the naira component has a balance of N29 billion. But last month, we had surplus revenue that was shared, we also had an excess revenue account charged with a balance of N4 trillion.

On the depletion of the Excess Crude, the AGF explained that the government had other financial obligations including subsidy payments to the NNPC and major independent oil marketers as verified by the PPPRA.

He added that, “A substantial amount of it was taken from the domestic Excess Crude Account, and very little was taken from the dollar account. We took about N20 billion from the naira account and the differential from the dollar account, because of the relative ease of accessing the naira account.”


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