By Sola Olajide
As Nigerian National Petroleum Corporation (NNPC) announced zero remittance into the federation account in May, the Director-General, Lagos Chamber of Commerce & Industry, Mr. Muda Yusuf has said social and economic systems of many states and local governments are at risk of complete collapse.
He expressed that the unfolding scenario is quite worrisome, stressing that the zero remittance by NNPC is part of the numerous consequences of the perpetuation of an unsustainable subsidy regime.
NNPC, in a circular to the office of the Accountant General of the Federation, signed by Umar Ajlya Isa, Chief Financial Officer blamed the zero remittance to hike in landing cost for fuel.
According to NNPC, the landing cost for fuel for the month of March was N184 per litre against the ex-coaster price of N128 per litre.
The DG, LCCI in a statement stated that, “If NNPC becomes completely incapacitated because of the burden of funding subsidy, the implications for states, and local government would be very dire.
“The social and economic systems of many states and local governments would be at risk of complete collapse.
“Infrastructure spending will suffer serious setbacks across all levels of government, payment of salaries will be a challenge, fiscal deficit may escalate and debt sustainability issues would be aggravated.
“It is thus imperative to come up with a creative and innovative exit strategy from the subsidy regime.”
By the content of the circular, which was copied the Minister of Finance, Budget, and National Planning, Director General, Nigeria Governors Forum, Director, Home Finance and Chairman, Commissioners of Finance Forum, the Federal Governments, States and Local Governments are going to be in serious financial crises in meeting their obligations.
The circular reads: “Further to our previous correspondences on the above subject, we wish to advise on the projected remittance to the Federation Account for the months of April (May, June. July, 2021 FAAC}.
“The Accountant General of the Federation is kindly invited to note that the average landing cost of Premium Motor Spirit (PMS) for the month of March 2021 was N184 per litre as against the subsisting ex-coastal price of N128 per litre, which has remained constant notwithstanding the changes in the macroeconomics variables affecting petroleum products pricing.
“As the discussions between Government and the Labour are yet to be concluded, NNPC recorded a value short fall of Nil in February 2021 as a result of the difference highlighted above.
“Accordingly, projection of remittance to the Federation for the next three months is presented in the attached schedule.
“Accordingly, the AGF is invited to note that the sum of Nil will be deducted from April 2021 Oil and Gas Proceeds due to the federation in May 2021, which will translate to zero remittance to the Federation Account from NNPC in the month of May 2021.
“This is to ensure the continuous supply of Petroleum Products to the nation and guarantee energy security.”