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NNPC Vows to Cut Cost, Boost Remittance to FAAC

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By Dipo Olowookere

A few days ago, a letter sent to the Accountant General of the Federation (AGF) by the Nigerian National Petroleum Corporation (NNPC) indicated that the state-owned oil agency would be unable to remit funds into the federation account because they have been used to subsidize petrol.

The letter, which was leaked to the media, raised eyebrows because it indicated that state and local governments would likely be in financial crisis as there would not be enough money to share this month when the Federal Accounts Allocation Committee (FAAC) meets.

Last month, the Governor of Edo State, Mr Godwin Emefiele, disclosed that the country was in a fiscal mess as the national government asked the Central Bank of Nigeria (CBN) to print about N50 billion to N60 billion to augment the allocation shared in April when there was a shortfall.

Though the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, denied this, she admitted that there was indeed a shortfall of N50 billion in the month.

So, it was disturbing when the NNPC said it would not be able to make any contribution to FAAC in May 2021 because of fuel subsidy, which the federal government has removed several times.

NNPC’s assurance

On Friday, the oil agency, in a statement issued by its spokesman, Mr Kennie Obateru, said it would do everything possible to cut its cost and boost remittances to FAAC.

NNPC, which assured of its continued commitment to meeting its financial obligations to the federation, blamed “unscrupulous persons” for leaking the letter “inappropriately” to the media, which caused fears and outrage.

The organisation stressed that the content of the letter was not a reflection of its overall financial performance as it was not in any way in financial straits as insinuated, noting that it was conscious of its role and was doing everything possible to shore up revenues and support the federation at all times.

“The shortfall will be remedied by the corporation as it relates only to the federation revenue stream being managed by the NNPC and does not reflect the overall financial performance of the corporation.

The NNPC remains in positive financial trajectory for the period in question,” it stated.

“The corporation pledged to continue to pursue and observe its cost optimization process with a view to maximizing remittances to the federation account,” a part of the statement said.

More oil earnings

Nigeria relies mainly on crude oil for foreign exchange earnings and the NNPC is in charge of the sale of the commodity and then remits to the federation account.

In the past few days, the price of crude oil at the global market has been rising, selling at $67 per barrel on Friday.

Though Nigeria produces lesser volume now, it makes more money. This is because when the country’s production was not controlled and was supplying about 2 million barrels per day, the price dropped to $20 to $30 per barrel, but that it produces about 1.4 million barrels per day, the price is between $60 and $68 per barrel.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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