Energy Watchdog Backs Tinubu on Federation Account Reconciliation
- The Centre for Energy Governance and Public Finance Accountability dismissed ADC’s claims that President Tinubu’s approval of NNPC legacy balance reconciliation violated the Constitution or reduced state revenues
- The group said the disputed balances were decades-old accounting entries arising from unresolved oil contracts, subsidy obligations, and reconciliation gaps predating the Petroleum Industry Act
- Officials confirmed that no cash was removed from the Federation Account and that the reconciliation corrected duplicated and unverifiable figures after FAAC review
A public finance advocacy group has rejected claims by the African Democratic Congress that President Bola Ahmed Tinubu’s approval of the reconciliation and removal of certain Nigerian National Petroleum Company Limited legacy balances from the Federation Account violated the Constitution or deprived subnational governments of revenue.
The Centre for Energy Governance and Public Finance Accountability said the allegations failed to reflect the historical and legal nature of the disputed entries.
Source: Facebook
Addressing journalists at a press briefing in Abuja, the group described the claims as unfounded and misleading. Its executive director, Dr Julius Osagie Eromonsele, said the balances were not new income generated under the current administration but accounting entries carried forward for decades, many of which predated the Petroleum Industry Act.
Legacy balances traced to past disputes
“It is crucial to note that the balances in question are not recent revenues generated under the current administration. They are long-standing legacy entries accumulated over decades, many of them arising before the enactment of the Petroleum Industry Act,” Eromonsele said.
He explained that the figures originated from unresolved production sharing contract disputes, domestic crude supply obligations linked to the former fuel subsidy system, royalty disagreements, and reconciliation gaps between NNPC, regulators, and revenue agencies. According to him, repeated audits had questioned their accuracy and legal enforceability, yet the entries remained on public books, creating unrealistic revenue expectations.
Eromonsele said the decision was not an arbitrary presidential action. He noted that a formal reconciliation process was carried out with relevant fiscal and regulatory bodies and presented to the Federation Account Allocation Committee.
“Official records show that approximately $1.42 billion and N5.57 trillion were removed from the Federation Account books after reconciliation established that these figures were either duplicated, overstated, unsupported by verifiable documentation, or no longer legally recoverable,” he said.
No cash loss to subnational governments
He added that the directive applied only to balances accumulated up to December 31, 2024. He said reconciliation should not be confused with the cancellation of legitimate revenue.
“Reconciliation is a recognised public finance practice. It is not the same as cancelling valid revenues. Rather, it is the process of aligning records to reflect economic and legal reality,” Eromonsele said.
He clarified that no cash was withdrawn from the Federation Account and that existing allocations to states and local governments were not reversed. He said the adjustment corrected long-standing accounting distortions rather than removing actual funds.
Constitutional issues and fiscal discipline
Responding to constitutional concerns, the group said Section 162 applies to revenues that are lawfully due and payable, not disputed or extinguished claims. Eromonsele argued that carrying false receivables weakens budgeting and fiscal planning.
The centre said the reconciliation aligns with reforms under the Petroleum Industry Act, which repositioned NNPC Ltd to operate under international accounting standards. It commended President Tinubu for approving what it described as a difficult but necessary step.
“Writing off long-standing, unverifiable legacy balances required political will and a commitment to fiscal honesty over convenience. It sends a clear signal that Nigeria is prepared to confront the structural weaknesses of its energy revenue system rather than perpetuate them,” Eromonsele said.
He urged political actors and stakeholders to support reforms that strengthen transparency and accountability in public finance management.
Labour Party mocks Obi’s defection speech
Legit.ng earlier reported that the LP leadership said it took notice of the defection of Obi and a few of his supporters to the ADC.
Obi's former party mocked the presidential hopeful's speech at the occasion, describing it as “lacklustre.”
In its statement, the LP 'wondered what new Obi intends to sell to Nigerians.'
Source: Legit.ng
