FAAC accuses NNPC of using lower FX rate for crude oil revenue

By Abubakar Yunus Abuja

The Federation Account Allocation Committee (FAAC) has accused the Nigerian National Petroleum Company (NNPC) of using an exchange rate lower than the Central Bank of Nigeria (CBN) official rate for the sale of domestic crude oil between 2015 and 2022.

The committee said this in a report signed by Kabir. M. Mashi, chairman of its post mortem subcommittee (PSMC).

The report was presented the sub-committee at FAAC’s monthly plenary meeting held on Tuesday, January 17, 2023.

The FAAC sub-committee said it observed some underpayments of N185.45 billion to the federation account as a result of the low exchange rate applied by the NNPC.

“On the exchange rate application by NNPC on domestic crude, FIRS PSC crude and NUPRC royalty crude sale values, the sub-committee observed some under payments of N185,458,842,270.76 to the federation account as a result of NNPC using exchange rate lower than the CBN official rate on domestic crude sale for the period 2015 to 2022,” the report reads.

FAAC also said the CBN has confirmed that “NNPC did not use the rate advised” by the bank.

It added that the national oil firm has not yet responded to the matter after “several months of being given the analysis to review”.

“Despite the concerns of FIRS, NUPRC and other stakeholders, NNPC Limited has continued to use a different exchange rate in remittances to the federation account till date,” the committee.

Consequently, the FAAC subcommittee recommended that the plenary should take a decision on the appropriate exchange rate to be used by NNPC Limited on remittances to the federation account going forward to avoid underpayments to the federation account.

It also said the plenary should engage a third party forensic auditor to validate the established underpayments to the federation account by NNPC.

Meanwhile, in a related development, the FAAC subcommittee said it also observed that within the post-mandated period, the issue of nonapplication of mandated rates by CBN for the months of March, April, and May 2020 resulted in the underpayment to the forex equalisation account by N67. 1 billion.

The sub-committee said it had earlier submitted its report to FAAC and awaits its investigation with CBN to ascertain why mandated rates were not used in the months under reference.