The Federal Government's indebtedness to the Nigerian National Petroleum Company Limited (NNPCL) due to exchange rate differentials on petrol imports has ballooned to N7.74 trillion as of September 2024.
This development follows the full deregulation of the downstream oil sector, which ended government subsidies on Premium Motor Spirit (PMS).
While the Federal Government is not necessarily the direct owner of the NNPCL, being a limited liability company, the debt obligation has raised concerns about its impact on the nation's finances.
FAAC Raises Alarm Over Revenue Decline
Members of the Federation Account Allocation Committee (FAAC) have expressed concerns over inconsistencies in revenue reporting by the NNPCL. The Ogun State Accountant-General, Tunde Aregbesola, particularly highlighted a significant drop in revenue remitted in December 2024 compared to November's inflow.
Reviewing financial records, FAAC members noted that NNPCL's receivables stood at approximately N10.8 trillion, raising questions about the accuracy of the figures.
Aregbesola stated that if these receivables were fully reconciled and accounted for, they would constitute a substantial portion of the total outstanding balance, potentially reshaping the government's fiscal outlook.
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FAAC Demands Transparency in Reconciliation
In response, FAAC Chairman Oluwatoyin Madein assured committee members that the matter is being handled through a Stakeholders Alignment Committee, which includes NNPCL and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
She emphasized the need for thorough reconciliation to ensure transparency and accuracy in government revenue calculations. However, members raised concerns about the timeline for concluding the reconciliation process, urging NNPCL to provide a definite schedule.
A representative of NNPCL stated that the company remains committed to finalizing the reconciliation process and ensuring that all outstanding receivables are properly accounted for by December 2024.
The ongoing discrepancies and debt burden further highlight the challenges of post-subsidy economic adjustments, raising questions about NNPCL's financial management and the government's fiscal sustainability in the face of rising oil-related obligations.
