NNPC’s $1.7b debt to FAAC

Another round of trouble is brewing between the Federation Account Allocation Committee (FAAC) and Nigeria National Petroleum Corporation (NNPC) following delay by Nigeria Petroleum Development Company (NPDC), an NNPC subsidiary, to offset the $1.7 billion owed FAAC.

According to a document, FAAC was angry that the NNPC had reneged on its pledge to pay the money.

The document, presented to members at the last FAAC meeting in Abuja, reminded members of “a report at its October meeting where NNPC claimed to have obtained government approvals to procure a loan to offset the outstanding $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 presented by FAAC’s Acting Chairman and Accountant General of the Federation (AGF) Mr. Idris Ahmed noted that NNPC lifted 100,000 barrels of petroleum twice as ‘good and valuable consideration’ due for payment in December.

Ahmed told members that “NNPC at the point of lifting crude oil barrels confirmed that the liftings were the option considered by it to offset the $1.74 billion owed by NPDC.”

FAAC members, particularly states decried NNPC’s handling of the NPDC debt.

Ahmed added “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. NNPC should come up with concrete and more acceptable option of settling the NPDC debt.”

It was gathered that a representative of NNPC assured FAAC of the corporation’s commitment to liquidate the debt.