N20bn underpayment: Osinbajo to resolve NNPC, FAAC disagreement

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The disagreement between the Nigerian National Petroleum Corporation and the Federation Account Allocation Committee over the alleged underpayment of N20bn by the NNPC to the Federation Account has been brought to the table of the Vice President, Prof. Yemi Osinbajo.

It was gathered on Sunday that the matter would be resolved by Osinbajo, as both parties had failed to reach a common ground on the issue since last Wednesday.

Senior officials of the national oil firm told our correspondent in Abuja that the Vice President, who is the Chairman of the National Economic Council, had to intervene in the matter in order to douse the tension between FAAC and the NNPC.

It was reported that the disagreement between FAAC and the NNPC took a different dimension on Saturday as the committee accused the corporation of deliberately under remitting oil revenue into the Federation Account.

The Chairman, Forum of Commissioners of Finance of FAAC, Mahmoud Yunusa, argued that the NNPC had not been transparent with the 36 states of the federation in the management of its operations, stressing that while the oil firm claimed on Wednesday to have remitted N147bn into the Federation Account, what was actually received was N127bn.

Reacting to this, the Group General Manager, Group Public Affairs Division, NNPC, Ndu Ughamadu, told our correspondent that the issue would now be resolved by Osinbajo.

In a brief text message to our correspondent on Sunday, Ughamadu said, “Latest response from the NNPC on finance commissioners’ stand on FAAC is that the issue will be resolved with the Vice President who chairs NEC.”

There have been disagreements in recent times between FAAC and the NNPC as a result of revenue underpayment into the Federation Account.

This year alone, the FAAC monthly meeting has ended in a deadlock on four different occasions due to what the committee described as the inability of the NNPC to meet its revenue obligations to the three tiers of government.

The inability of the committee to agree on revenue remittances by the corporation forced an indefinite postponement of the meeting last Wednesday, a development that may make most states to be unable to pay the June salaries of their workers on time.

This is coming as the NNPC/First Exploration and Production Joint Venture announced on Sunday that it had finalised the $774m Schlumberger oil finance deal.

The national oil firm stated that this happened one year after signing the tripartite term sheet for the financing and technical services arrangement between the NNPC/First E&P JV and Schlumberger for the Anyalu and Madu fields under Oil Mining Licence 83 and OML 85 offshore Nigeria.

It said a final nod was given to the package in London with the execution of the final contractual agreement.

Under the agreement, global oil services giant, Schlumberger, will provide $724.14m out of the required project cost of $1.082bn, while the balance of $358.79m is to be funded with cash flows generated by the project.

The Anyala and Madu fields are projected to hold 193 million barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves, with production plateau of 50,000 barrels of oil per day and 120 million standard cubic feet of gas per day.

The Group Managing Director, NNPC, Maikanti Baru, said the package would enable the country to generate $5.60bn in taxes and royalties, and $1.32bn in net cash flows after Schlumberger’s cost recovery and compensation in line with the terms of the agreement.

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