Mrs. Kemi Adeosun, the Minister of Finance, has raised alarm that the stalemate in Federation Account Allocation Committee, FAAC, disbursing allocations to states would affect payment of salary to some states’ workers June this year.
Despite the FAAC’s imbroglio, Akwa Ibom and Cross River states are said to have reportedly paid June salary to their state workers.
State Commissioners of Finance, who had converged on Abuja with the expectation to collect their states’ share of the monthly allocation, reportedly walked out of the FAAC meeting as they protested the deductions.
This is even as the National Economic Council, NEC, Thursday at its monthly meeting demanded explanations from the Nigeria National Petroleum Corporation, NNPC, over unclear deductions the corporation made from the Federation Account, which caused a stalemate at the Federation Account Allocation Committee, FAAC, on Wednesday.
Adeosun, who chairs FAAC, brought the matter to the NEC at the Council Chamber, State House, Abuja, chaired by Vice-President Yemi Osinbajo, with state governors, Central Bank governor, and others as members.
At the end of the NEC meeting, Adeosun told State House correspondents that NEC was not comfortable with the deductions, and had asked the NNPC to explain the circumstances around the development.
She said, “I gave an account that I give every month on the balances in our federation account excess crude account and the stabilization account, those are my routine updates.
“Items to note on the excess crude account is that in May, we had an additional credit of $80.6 million that accrued into the excess crude account.
”Also in my capacity as chairman of FAAC, I briefed governors on the deadlock that we have got currently in the federation account and explained what happened. And there was quite and extensive debate on what to do.
“For the purpose of this briefing, we operate NNPC as a business, we have invested public capital in that business and we have expectations of return and when that return fails lower than our expectations then the owners of this business which in this case is the federal government and states need to act.
“So, that was what caused the deadlocked Wednesday and we really felt the figures the NNPC was proposing for FAAC were unacceptable. We felt that some of the costs couldn’t be justified and so we have decided that rather than approve the accounts, we will go back and do further work.
“So, further negotiations and interactions are going on with NNPC as we speak. However, we did brief both Mr. President and Mr. Vice President on the deadlock and asked for their support and their forbearance in this because the consequence of this is that, salaries might well be delayed in many states as a result of this.
“But we feel that in order to get to the accurate figures that we need, we have asked for forbearance and the governors and the federal government are all in agreement that we need to get to the bottom of those figures.
“In particular, now that the oil price is now $76 per barrel in the spot market which means that bonny light is about $78, we want to be aggressively putting money away into the excess crude account.
“So, we are very, very conscious that this period, this window of relatively high oil price might not last and we will like to be able to save. If we cannot get into the federation account the sort of revenues we are expecting then we will not be able to save.
“So it was a very important point really underscored by all the governors and they really want action taken and they are fully in support of the positions of the Federal Ministry of Finance and the commissioners of finance not to approve those accounts until we get further explanations on some of the cost being implemented.“
On what was the issue with the NNPC, she said, “Based on oil price, oil quantity you can pretty much calculate what you are expecting to see in the federation account and if the figure is less, then the right question that any stakeholder must ask is why.
“So we have been going back and forth with NNPC to try and understand these figures before we can accept them. Remember that the FAAC figures have to be formally accepted by the federation-account committee and we were simply not comfortable with the quantum of some of the deductions made and, therefore, we could not approve those figures.
“So even as we speak, there is an interface going on between the commissioners forum, ministry of finance, office of the accountant general, CBN and NNPC but we hope to be able to convene FAAC within next few days.”
Governor Ifeanyi Okowa of Delta State, who briefed the press alongside Adeosun, sated that the NEC approved the financial report of the Nigeria Sovereign Investment Authority (NSIA), for 2016 and update for 2017.
He said the report indicated a positive profitability over the past five years, at about $8 million per year; and $1.25 million as assets at a rate of 6.6 percent return on assets.
He reported that since the inception of NSIA, it had been making profits in the past five years in all its funds, with core profits (excluding FX transaction gains) of N26.28 billion ($88 million) for the year.