The Centre for Energy Governance and Public Finance Accountability (CEGPFA) has rejected claims by the African Democratic Congress (ADC) that President Bola Ahmed Tinubu’s approval of the reconciliation and removal of certain Nigerian National Petroleum Company Limited (NNPC Ltd) legacy balances from the Federation Account was unconstitutional or financially harmful to states and local governments.

Speaking on Friday at a press conference in Abuja, the centre described the allegations as “unfounded” and “misleading,” arguing that they ignored the historical, legal and fiscal realities surrounding the disputed balances.

Dr Julius Osagie Eromonsele, executive director of CEGPFA, said the balances were not fresh revenues generated under the current administration but long-standing legacy entries accumulated over several decades, many of which predated the Petroleum Industry Act (PIA).

“It is crucial to note that the balances in question are not recent revenues generated under the current administration. They are long-standing legacy entries accumulated over decades, many of them arising before the enactment of the Petroleum Industry Act,” Eromonsele said.

He explained that the disputed figures arose from unresolved production sharing contract disputes, domestic crude supply obligations under the former fuel subsidy regime, royalty assessment disagreements, and reconciliation gaps between NNPC, regulators and revenue agencies.

According to him, the balances had remained on the Federation Account books for years despite repeated audits questioning their accuracy, legal enforceability and collectability, thereby distorting the fiscal outlook of the federal, state and local governments.

Eromonsele dismissed suggestions that the balances were arbitrarily written off, stating that the decision followed a formal reconciliation process involving relevant fiscal and regulatory institutions, with presentations made to the Federation Account Allocation Committee (FAAC).

“Official records show that approximately $1.42 billion and N5.57 trillion were removed from the Federation Account books after reconciliation established that these figures were either duplicated, overstated, unsupported by verifiable documentation, or no longer legally recoverable,” he said.

He stressed that the directive applied only to legacy balances accumulated up to December 31, 2024, adding that reconciliation should not be confused with the cancellation of valid revenues.

“No cash was removed from the Federation Account, and no allocations to states or local governments were reversed,” Eromonsele said, noting that the exercise merely corrected inherited accounting distortions.

Addressing constitutional concerns, the centre argued that Section 162 of the Constitution applies to revenues that are lawfully due and payable, not to disputed or extinguished claims.

CEGPFA said the reconciliation aligns with reforms introduced by the PIA and commended President Tinubu for approving what it described as a necessary step toward fiscal transparency and accountability.

Vanguard News