Energy group dismisses ADC’s claim over Tinubu’s NNPCL debt forgiveness

An energy accountability organisation has dismissed claims by the African Democratic Congress (ADC) that President Bola Ahmed Tinubu’s approval of the reconciliation and removal of certain Nigerian National Petroleum Company Limited (NNPC Limited) legacy balances from the Federation Account was unconstitutional or detrimental to states and local governments.

At a press briefing in Abuja on Friday, the Centre for Energy Governance and Public Finance Accountability (CEGPFA) described the allegations as misleading, arguing that they failed to reflect the historical, legal and fiscal context of the disputed figures.

The group’s Executive Director, Dr Julius Osagie Eromonsele, explained that the balances were not new revenues generated under the current administration but long-standing legacy entries accumulated over several decades, many of which existed before the Petroleum Industry Act (PIA) came into effect.

According to him, the disputed sums arose from unresolved production-sharing contract disputes, domestic crude supply obligations linked to the former fuel subsidy regime, royalty assessment disagreements, and reconciliation gaps between NNPC, regulators and revenue agencies.

Eromonsele said the figures had remained on the Federation Account for years despite multiple audits questioning their accuracy, legal validity and recoverability, thereby distorting the true financial position of the federation.

He countered claims that the balances were arbitrarily written off, stressing that the decision followed a formal reconciliation process involving relevant fiscal and regulatory bodies, with submissions made to the Federation Account Allocation Committee (FAAC).

He disclosed that about $1.42 billion and N5.57 trillion were removed from the Federation Account records after reconciliation showed they were duplicated, overstated, unsupported by verifiable documentation or no longer legally recoverable.

The CEGPFA clarified that the directive applied only to legacy balances accumulated up to December 31, 2024, and did not amount to the cancellation of legitimate revenues.

Eromonsele further explained that no cash was withdrawn from the Federation Account and that allocations to states and local governments were not affected, noting that the exercise merely corrected inherited accounting inconsistencies.

Addressing constitutional concerns, the group said Section 162 of the Constitution covers only revenues that are lawfully due and payable, not disputed or extinguished claims. It added that maintaining unrealistic receivables undermines fiscal planning and revenue predictability at the subnational level.

The centre also noted that the reconciliation aligns with reforms under the PIA, which repositioned NNPC Ltd as a commercially driven entity operating under international accounting standards.

According to the group, the decision reflects a commitment to fiscal transparency and reform, urging political actors and stakeholders to support measures that strengthen accountability and realism in Nigeria’s public finance system.

“The funds in question were not sitting as cash in the Federation Account. What occurred was the correction of inherited accounting distortions that had long outlived their practical relevance,” the group stated.

The clarification comes amid controversy surrounding President Tinubu’s approval of the write-off of NNPC Ltd’s legacy obligations to the Federation Account, estimated at about $1.42 billion.

Energy group dismisses ADC’s claim over Tinubu’s NNPCL debt forgiveness