Vanguard News

NNPC and FAAC facts of sharing

By Sunny Atumah

As individuals and communities we are encouraged to share what we have with others. The love and care for neighbour is divine in nature. The concept of sharing is also not to encourage indolence. The Nigerian constitution authorized funds of the federation to be in a central pool to be distributed; to each according to an agreed formula.  That spirit of cooperation and solidarity had existed among the sub national governments since the First Republic.

Group Managing Director of the NNPC, Dr Maikanti Baru

The basis of revenue allocation in the 1960 Independence and 1963 Republican constitutions of Nigeria were strictly derivative. Section 140 which made provision for the sharing of the proceeds of minerals, including mineral oil, mandated the Federal Government to pay to a region, a sum equal to 50 per cent of the proceeds of any royalty received by the Federation in respect of any minerals extracted in that region and any mining rents derived by the Federal Government from within any region. The Gowon Administration’s Petroleum Act of 27 November, 1969 altered the 50 percent royalties and rents received from mining enterprises to the component states in which mining was done. He abolished the existing derivation formula for one based on population and size of states which subsequent administrations tinkered with to the present 13 percent derivation to oil producing states.

How the distributable funds are shared and for what has been our bane. The dimension it has taken has become a source of serious concern for an economy that is monomaniacal in nature; literally depending on oil for survival. It is a cause for worry that a tinkering of the constitution is needed to cater for what has become an abnormality. As a people we are also not demanding for accountability in the management of resources. The direct consequences are the agitations for self-determination, resource control, devolution of powers, equity and justice and restructuring (whether economic or political) that have pervaded our land. The words of Thomas Woodrow Wilson (1856-1924) who was the 28th President of the United States (1913–1921) explained this in a speech in Des Moines, Iowa on 1st February 1916: “America cannot be an ostrich with its head in the sand.” Ditto Nigeria?

Last week, the monthly Federation Accounts and Allocation Committee, FAAC, meeting failed to reach agreement on remittances by the NNPC. The FAAC is made up of the Minister of Finance, the Accountant General of the Federation, the 36 States Commissioners of Finance and their Accountants General, the Central Bank of Nigeria and all other officials recognized in funds sharing. The FAAC refused to share the revenue made available by NNPC as statutory allocation for the three tiers of government for June because the revenue made available by NNPC for sharing allegedly fell lower than expectations. It was a harmony of interests and collective action by the states finance representatives to reject their shares of distributable funds that ordinarily matured monthly. There was a fit of temper that the amount allegedly fell short of N20 billion dollars or was it N40 billion. How low have we degenerated as a nation? Reconciliation would have solved the problem rather than the We no go gree O attitude.

The Maikanti Baru-led NNPC should give a comprehensive brief on this matter to bridge the mutual distrust on the state of affairs in its operations. PMS import has been a critical factor in the arguments and we are not addressing it. It is true the price of crude has gone up. That equally translates to a substantial increase in price being that the NNPC imports virtually all the PMS we have refused to refine locally. The NNPC late last year promised that Nigeria would be self sustaining of PMS in 2019. The refineries are still comatose leading to imports that are not appropriately priced and highly subsidized from our crude sales. Unfortunately, the Federal Government would shy away from this because of electioneering. We want to have our cake and eat it.

The system as manifested in relying on crude oil without adding value is making us fanatically lazy and to a degree of extravagant wastefulness. Our obsession with asset sharing has led us to living in devotional economic denials. Our ability to envision realizable ideals through critical thought is fast disappearing even as the Fourth Industrial Revolution, 4.0 that does not recognize crude oil stares us in the face. We can use petroleum to jumpstart our ailing economy to create wealth. Three weeks ago it was a global issue that Nigeria’s crude was floating in the Amsterdam-Rotterdam-Antwerp trading hub without buyers, 60 years after we started exporting crude oil to Europe. Nobody interrogated that aspect of our operations but preferred fetching water from broken pipes and not from the taps. Nigeria’s population has 87 million that are rated the poorest globally with a high level of income inequality. The accusations and counter accusations between the NNPC and the FAAC would not help Nigeria. We should stop playing the ostrich!


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