August 17, 2022

NNPC Was Right To Withhold From Crude Oil Sales Directly-Group

3 min read

The Integrity Youth Alliance has faulted the statement credited to the former Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Engr. Elias Mbam, in the Nation Newspaper titled “FAAC members worried over N80.6b deductions by NNPC,” where he was quoted to have said, “The only beneficiaries of the FAAC money are the Federal Government, state governments, and local governments.” Any other person or body getting money directly from the federation account is illegal. “

Also, a Commissioner of Finance from a Northwest state, who preferred not to be named, agreed. He said: “NNPC deducts from the sales of crude oil directly to fund government priority projects before sending it to the Federation Account.” This is not right. We have been raising this issue time without number, but they keep repeating it. “

In a swift reaction, the Board Chairman of the Integrity Youth Alliance, Adewole Kehinde, said that though the NNPC is now NNPC Limited, Section 7(4) (a) and (b) of the Nigerian National Petroleum Corporation Act provides that the corporation shall maintain a fund, which shall consist of such money as may be received by the corporation in the course of its operations or relation to the exercise by the corporation of any of its functions under this Act, and from such funds that shall be defrayed all expenses incurred by the corporation.

The statement read, “Section 7(5) of the same Act states that the corporation must submit to the National Council of Ministers (FEC) estimates of its expenditure and income for the following fiscal year no later than three months before the end of each fiscal year.

“The above provisions imply that NNPC can receive revenue in the course of its operations, and from such money, it can defray all its expenses and that such expenditure and income must arise from its annual budget approved by the National Council of Ministers. (FEC)

“NNPC is, indeed, legally bound to pay its gross income or revenues into the Federation Account, and it may only defray its expenses after it has been appropriated by the National Assembly and the Minister of Finance has authorized such payment via warrants issued to the Accountant-General of the Federation.” It is obvious that this law does not authorize the NNPC to defray its expenses unilaterally, without the authorization of either the National Assembly or the Minister of Finance, which it is believed is the fallout of its defraying its expenses out of its gross income before paying the balance into the Federation Account.

“It has been argued that Section 7 (4) of the NNPC Act authorizes the Corporation to settle its debts and expenses before remitting the balance of its income into the Federation Account. Such an argument would be untenable, as it is inconsistent with section 162 of the 1999 Constitution. It is a trite law that the Constitution is supreme and any law that is inconsistent with it will be invalid, null, and void to the extent of the inconsistency.

“The correct approach to the interpretation of section 7 (4) of the NNPC Act is to construe it subject to the provisions of sections 21 and 22 of the Fiscal Responsibility Act and sections 44 (3), 80, 81, and 162 of the Constitution of the Federal Republic of Nigeria 1999, as amended.

“It is submitted that when that is done, the conclusion would be that while NNPC is entitled to maintain a fund from which it may defray its expenses, it may only do so upon appropriation of funds for that purpose by the National Assembly and warrants by the Minister of Finance directing the issuance of those funds from the Consolidated Revenue Fund of the Federation.

“From the above explanation, it is clear that the Nigerian National Petroleum Corporation, now NNPC Limited, has not violated any law by deducting from the sales of crude oil directly to fund government priority projects.

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