The Centre for Energy Governance and Public Finance Accountability has dismissed allegations by the African Democratic Congress (ADC) that President Bola Ahmed Tinubu acted unconstitutionally by approving the reconciliation and removal of the Nigerian National Petroleum Company Limited (NNPCL)’s long-standing legacy balances from the Federation Account.
Addressing journalists in Abuja on Friday, the centre stated that the ADC’s accusations were misleading and based on misinterpretation, stressing that the move was aimed at correcting persistent accounting discrepancies—not eliminating genuine revenue inflows.
During the briefing at the Transcorp Hilton, the Centre’s Executive Director, Dr. Julius Osagie Eromonsele, clarified that the balances being debated were not earnings generated during the current administration but “historical entries accumulated over several decades,” many originating long before the Petroleum Industry Act came into effect.
He emphasized that these figures were tied to unresolved production sharing contract disputes, domestic crude supply obligations tied to the previous fuel subsidy system, royalty assessment disagreements, and longstanding reconciliation shortfalls involving NNPC, relevant regulators, and revenue-generating agencies.
According to Eromonsele, these legacy entries had remained on the Federation Account for years, despite recurring audit reports questioning their accuracy, legal standing, and likelihood of recovery.
He warned that treating such figures as guaranteed revenue created a deceptive perception of national income and generated unrealistic expectations across federal, state, and local government levels.
Reacting to claims that the balances were removed arbitrarily by the President, Eromonsele said the approval followed a structured reconciliation process involving fiscal and regulatory bodies, including formal submissions to the Federation Account Allocation Committee (FAAC).
He noted that official documentation confirmed that roughly $1.42 billion and ₦5.57 trillion were expunged from the Federation Account after reconciliation proved that the figures were duplicated, exaggerated, unsupported by verifiable records, or no longer recoverable under law.
The reconciliation, he added, applied exclusively to legacy balances accumulated up to December 31, 2024, and should not be interpreted as an attempt to erase legitimate revenue inflows.
“Reconciliation is a standard and internationally recognized public finance procedure,” he explained. “It does not amount to eliminating valid revenue but ensures the government’s books accurately reflect legal and economic realities.”
Eromonsele also clarified that no physical cash was withdrawn from the Federation Account and that previously disbursed allocations to states and local governments remained untouched.
He reiterated that the affected figures were not actual cash deposits but outdated accounting records that no longer held practical value.
Addressing the constitutional angle raised by the ADC, the centre explained that Section 162 of the Constitution applies only to revenue that is legally due and collectible—not to contested or extinguished claims.
He further stressed that responsible public financial management requires ongoing reconciliation to ensure that only verifiable, legally enforceable revenues are considered for national distribution. Maintaining questionable receivables, he said, disrupts credible budgeting, fiscal planning, and revenue forecasting.
Eromonsele argued that all tiers of government stand to gain more from reliable revenue projections than inflated figures that never translate into actual funds.
The centre also highlighted that the reconciliation aligns with reforms introduced by the Petroleum Industry Act, which transformed NNPCL into a profit-driven commercial entity operating under global accounting norms.
He stated that legacy balances created under an outdated governance structure should not be allowed to distort Nigeria’s post-PIA fiscal system indefinitely.
Eromonsele praised President Tinubu for approving what he described as a tough but essential corrective measure.
“Resolving decades-old, unverifiable legacy balances required decisive leadership and a commitment to fiscal transparency over convenience,” he said. “It demonstrates Nigeria’s readiness to address deep-rooted weaknesses in its energy revenue architecture rather than ignore them.”
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