States In Trouble As NNPC Says Contributions To FAAC Not Feasible Due To Subsidy

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States In Trouble As NNPC Says Contributions To FAAC Not Feasible Due To Subsidy

State governments in the country may face hard times starting from May, as the Nigerian Nation Petroleum Corporation (NNPC) has declared that it would not be able to meet its monthly obligation and remittance to the Federation Accounts Allocation Committee (FAAC) from May

The national oil company, a major contributor of remittances to FAAC, stated this in a letter to the Accountant General of the Federation dated April 26, 2021 by its Chief Financial Officer, Umar Isa.

The NNPC, in the letter, stated that it would only be able to remit N12.966bn to the FAAC in June after removing fuel subsidy from its income.

“The Accountant-General of the Federation is kindly invited to note that the average landing costs for Premium Motor Spirit for the month of March 2021 was N184 per litre against the subsisting ex-coastal price of N128 per litre, which has remained constant notwithstanding the changes in the macroeconomic variables affecting petroleum products pricing.

“As the discussions between Government and the Labour are yet to be concluded, NNPC recorded a value shortfall of N111.966,456,903.74 in February 2021 as a result of the difference highlighted above.

“Accordingly, a projection of remittance to the federation for the next three months is presented in the attached schedule.”

With this development, states in the country may find it difficult to meet its financial obligations, especially payment of salaries, as almost all of them depend on federal allocations to carry out the business of governance.

 

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