The Centre for Energy Governance and Public Finance Accountability has rejected claims by the African Democratic Congress (ADC) that President Bola Ahmed Tinubu’s approval of the reconciliation and removal of Nigerian National Petroleum Company Limited (NNPCL) legacy balances from the Federation Account was unconstitutional.
At a press conference in Abuja on Friday, the centre described the allegations as misleading, insisting that the decision corrected long-standing accounting distortions rather than wiping out real revenues.++See more details
Speaking at the briefing held at the Transcorp Hilton, Abuja, the Executive Director of the centre, Dr Julius Osagie Eromonsele, said the balances at the heart of the controversy were not new earnings under the current administration but “long-standing legacy entries accumulated over decades”, many of which predated the Petroleum Industry Act.
“It is crucial to note that the balances in question are not recent revenues generated under the current administration.
They are long-standing legacy entries accumulated over decades, many of them arising before the enactment of the Petroleum Industry Act,” Eromonsele said.
He explained that the disputed figures arose from unresolved production sharing contract disputes, domestic crude supply obligations under the former fuel subsidy regime, royalty assessment disagreements and reconciliation gaps involving NNPC, regulators and revenue agencies.
According to him, these balances had remained on the Federation Account for years despite repeated audits raising concerns about their accuracy, legal enforceability and collectability.
“Treating such disputed figures as assured income created a distorted picture of public finances and fostered unrealistic revenue expectations across all tiers of government,” he added.
Responding to suggestions that the balances were arbitrarily written off by presidential fiat, Eromonsele said President Tinubu’s approval followed a formal reconciliation process involving relevant fiscal and regulatory institutions, including presentations to the Federation Account Allocation Committee.
“Official records show that approximately 1.42 billion dollars and 5.57 trillion naira were removed from the Federation Account books after reconciliation established that these figures were either duplicated, overstated, unsupported by verifiable documentation, or no longer legally recoverable,” he said.
He stressed that the directive applied only to legacy balances accumulated up to December 31, 2024, and should not be misconstrued as the cancellation of valid revenue.
“Reconciliation is a recognised public finance practice. It is not the same as cancelling valid revenues. Rather, it is the process of aligning records to reflect economic and legal reality,” he said.
Eromonsele also clarified that no cash was taken out of the Federation Account and that allocations already made to states and local governments were not reversed.
“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,” he said.
On the constitutional argument advanced by the ADC, the centre said Section 162 of the Constitution applies only to revenues that are lawfully due and payable, not to disputed or extinguished claims.
“Public finance administration requires constant reconciliation to ensure that only valid, auditable and legally enforceable revenues are presented for distribution,” Eromonsele said, adding that maintaining false receivables undermines budgeting, fiscal discipline and revenue predictability.
He argued that states and local governments benefit more from credible and realistic revenue flows than from inflated figures that never materialise in cash form.
The centre said the reconciliation was consistent with reforms under the Petroleum Industry Act, which repositioned NNPCL as a commercial entity operating under international accounting standards.
“Legacy balances accumulated under a fundamentally different governance structure cannot be allowed to distort the post-PIA fiscal framework indefinitely,” Eromonsele said.
He commended President Tinubu for approving what he described as a difficult but necessary decision.
“Writing off long-standing, unverifiable legacy balances required political will and a commitment to fiscal honesty over convenience.
It sends a clear signal that Nigeria is prepared to confront the structural weaknesses of its energy revenue system rather than perpetuate them,” he said.+See full details
𝗙𝗼𝗹𝗹𝗼𝘄 𝗢𝘂𝗿 𝗪𝗵𝗮𝘁𝘀𝗔𝗽𝗽 𝗖𝗵𝗮𝗻𝗻𝗲𝗹 𝗧𝗼 𝗚𝗲𝘁 𝗟𝗮𝘁𝗲𝘀𝘁 𝗡𝗲𝘄𝘀 𝗔𝘀 𝗜𝘁'𝘀 𝗗𝗿𝗼𝗽!
