Energy Group Dismisses ADC’s Claim on Tinubu’s NNPC Legacy Balance Approval

An energy accountability organisation has faulted 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 Ltd) legacy balances from the Federation Account was unconstitutional or harmful to states and local governments.

Speaking at a press briefing in Abuja on Friday, the Centre for Energy Governance and Public Finance Accountability (CEGPFA) described the allegations as misleading and lacking proper historical, legal and fiscal context.

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

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

Eromonsele noted that the figures had remained on the Federation Account for years despite repeated audits questioning their accuracy, legal standing and recoverability, thereby distorting the true financial position of the federation.

He dismissed suggestions that the balances were arbitrarily written off, stressing that the exercise followed a formal reconciliation process involving relevant fiscal and regulatory institutions, with submissions duly made to the Federation Account Allocation Committee (FAAC).

He revealed 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 strictly to legacy balances accumulated up to December 31, 2024, and did not amount to the cancellation of legitimate revenues due to the federation.

Eromonsele further stated that no cash was withdrawn from the Federation Account and that allocations to states and local governments were not affected, explaining that the process merely corrected inherited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

On constitutional concerns, the group argued that Section 162 of the Constitution applies only to revenues that are lawfully due and payable, not to disputed or extinguished claims. It added that retaining unrealistic receivables undermines fiscal planning and revenue predictability at the subnational level.

The centre also observed that the reconciliation aligns with ongoing reforms under the PIA, which repositioned NNPC Ltd as a commercially oriented entity operating in line with international accounting standards.

According to the group, the decision underscores the Tinubu administration’s commitment to fiscal transparency and reform, urging political actors and stakeholders to support measures that promote accountability and realism in Nigeria’s public finance management.

“The funds in question were never sitting as cash in the Federation Account. What occurred was simply the correction of inherited accounting distortions that had long outlived their practical relevance,” the group stated.

The clarification comes amid ongoing controversy over President Tinubu’s approval of the reconciliation and removal of NNPC Ltd’s legacy obligations to the Federation Account, estimated at about $1.42 billion.