According to reports, the failure of some oil companies in remitting their royalties to the Nigerian National Petroleum Corporation NNPC caused the reduction in revenue remitted by the Corporation into the Federation’s Account for the month of February.
Out of the expected royalties of $85.21m for February, only $16.56m was actually released by companies operating in the oil sector to the corporation.
The reduction in revenue into the federation account by the NNPC caused the Federation Account Allocation Committee meeting to end in a stalemate last week.
Mahmoud Yunusa, chairman, the forum of FAAC commissioners, said the states rejected the amount presented by the NNPC because it was far lower than what was projected for the month.
The deadlock was however resolved by the Minister of Finance, Mrs. Kemi Adeosun, with the federal, state and local governments agreeing to share ₦647.390 billion.
The FAAC meeting held in December last year was equally tense as states protested what they referred to as discrepancies in revenue reported by the NNPC. A committee headed by two governors was set up to investigate this.
Royalties are paid by operating companies to the government. This is based on a percentage of the gross production from their exploration activities and this is free of all costs, except for taxes.
The Federation Allocation Accounts Committee is a committe that comprises representatives from the 36 States of the federation and the FCT. It is headed by the Minister of Finance and meets monthly to disburse generated revenue to the three-tiers of government.