There is trouble between the Federation Account Allocation Committee (FAAC) and Nigerian National Petroleum Corporation (NNPC) over the delay by the NNPC to offset an outstanding debt of $1.7 billion owed the federation account by Nigerian Petroleum Development Company (NPDC), a subsidiary of NNPC.
according to a document, FAAC members were angry at the NNPC for reneging on payment after giving assurances to settle the debt. The report which was presented to FAAC members at the last FAAC meeting in Abuja drew the attention of members to a report presented at the October 2018 FAAC meeting where NNPC claimed to have obtained the necessary government approvals to procure a loan to offset the outstanding payment of $1.74 billion good and valuable consideration on Shell Petroleum Development Company (SPDC) assets acquired by NPDC. The NNPC promised to obtain the financial value of the loan by the end of fourth quarter, 2018″.
A summary of the report presented by FAAC acting Chairman, and Accountant General of the Federation (AGF) Mr. Idris Ahmed, noted that, the NNPC had made two lifting of 100,000 barrels of Petroleum in the name of good and valuable consideration’ that were due for payment in December, 2018.
Idris Ahmed told FAAC members that the NNPC at the point of lifting crude oil barrels confirmed that, the lifting were the option considered by it to start off-settling the $1.74 billion owed by NPDC.
After the presentation of the report, FAAC members particularly the state governments expressed worry over NNPC’s handling of the repayment of the NPDC debt.
While presenting the report, the sub-Committee was worried that the option of using 100,000 barrels of crude oil lifting per month would take up to 20 years to settle the NPDC debt. There were still outstanding Royalty and Petroleum Profit Tax (PPT) that NPDC was yet to settle with DPR and FIRS respectively. NNPC should come up with concrete and more acceptable option of settling the NPDC debt.”
It was gathered that, a representative of NNPC (name not disclosed) assured FAAC of the Corporation’s commitment to liquidate the lingering debt.
The NNPC representative explained that, the cargoes lifting option was a measure to ensure that funds were made available to the federation account from outstanding debt, pending the drawn- down from the facility being arranged by the corporation to offset the debt”, the report said.
The Representative was said to have further assured that “the corporation was borrowing the funds from the international financial markets to repay the debt citing strict conditions attached by the Lenders as a major challenge for not repaying the debt on time.”