NGF Chairman and Governor of Ekiti, Dr Kayode Fayemi gave the advice when he led a delegation of the forum on a courtesy call to the new Group Managing Director, NNPC, Mele Kyari, on Wednesday in Abuja.
Fayemi, in his speech made available to the media said that the NGF had pushed for a number of accountability measures in remittance of oil revenues.
“Working with Mr. President, we had resolved that the collection and remittance of oil royalties should be returned to the Department of Petroleum Resources (DPR) as stipulated under the petroleum industry law.
“Similarly, the collection and remittance of the Petroleum Profit Tax (PPT) should be returned to the Federal Inland Revenue Service (FIRS) in line with extant laws.
“It was in this vein that Mr. President directed that a revised revenue remittance template should be developed jointly by NNPC, the Ministry of Finance, Office of the Accountant General of the Federation and Revenue Mobilization Allocation and Fiscal Commission.
“Going forward, a major direction for the Forum is to identify options that will help stabilise revenues from oil.
“We need to consider options to determine a ‘revenue trend’ that corresponds to the long-term trend of exports and that will be enough to stabilise government budgets.”
Kayode said that the growth and stability of the oil industry had a significant bearing on their plans.
“We have recorded a period where monthly allocation from the Federation Account Allocation Committee (FAAC) reached as high as N1.1 trillion in June 2014, and in another month in May 2016, the three tiers of government shared just over N289 billion.
“Besides, the fall in oil price and production, some of the challenges that have compounded instability in the market include the impact of cash call obligations and the accumulation of liabilities.
“We also have crude oil theft/losses with about 200,000 barrels of crude oil per day lost to oil theft, while about 500,000 barrels per day is deferred in production shut-ins.
” There is also the existing regulation for Production Sharing Contracts (PSCs), which grossly limits government royalties and tax revenues. These are ongoing issues we must work to resolve,” he said.
In 2017, according to the governor, the Minister of Finance had estimated that a minimum amount of N700 billion must be generated and shared by FAAC monthly to the three tiers of government.
According to him, this was to enable the three tiers of government to meet up with obligations of salary payment, statutory transfers and debt servicing.
“But more can be done. We would like our team to work with the corporation to develop a realistic revenue forecasting model for oil revenues.
“This will help state governments plan appropriately to mitigate to a large extent the recurring fiscal shocks we experience.”
Fayemi, however, described subsidy as a major drawback on government revenues, while calling for “a new deal on how governments will absorb the cost of subsidy.
“This has become necessary given the new reality of low oil revenues and rising government commitments.
“We believe that at the current course, subsidy costs will continue to offset any recovery in the oil market.
“The country recorded one of its lowest cost of subsidy in 2016 when oil traded at an average of US$48.11 pb.
“Total subsidy that year was around N28.6 billion; but the amount rose to N219 billion in 2017 and N345.5 billion by mid-2018, as the price of oil and domestic PMS consumption rebounded.
“These are important considerations for us, with direct implications on energy, security and economic stability in the country.
“We would like to see beyond these areas too, including new partnerships for investments across states and knowledge transfer for our people through research and strategic events,” he said.
In his reaction, Kyari assured the forum of transparency in the financials and operations of the NNPC.
The NNPC Group General Manager, Group Public Affairs Division, Ndu Ughamadu, quoted Kyari in a statement as saying the corporation will continue to engage the Forum to make the operations of the Oil and Gas Industry smooth in the country.
“We would promote partnership with the states in the area of renewable energy in line with our plan to transform into a competitive global integrated energy company,” Kyari said.
He assured NGF that the NNPC would cooperate to grow crude oil production, renewable energy and generate more revenue for the country.
Kyari described the NGF as an important and critical stakeholder to the successes of the corporation’s operations.
“It is our job to deliver value for the teeming population of this country. The NNPC has no excuse but to deliver on its mandate by touching the lives of Nigerians in many positive ways.
“We will ensure steady and unimpeded supply and distribution of petroleum products and we will also ensure that the NNPC remittances to the Federation Account Allocation Committee (FAAC) are enhanced,” Kyari assured.
He also promised that NNPC would continue to drive the level of production that would ensure steady generation of royalties and petroleum profit taxes from all its partners in the oil and gas value chain.