The Nigerian National Petroleum Company Limited has requested an additional subsidy refund of N1.19 trillion for July 2024, citing exchange rate differentials on Premium Motor Spirit importation and joint venture taxes, according to findings by The PUNCH.

But state governments tackled the national oil company over the latest request, as they raised concerns over NNPCL’s accounting practices.

These findings were based on the Federation Account Allocation Committee Postmortem Sub-Committee report for September 2024, which was obtained by The PUNCH on Monday.

The report revealed that exchange rate differentials stood at N4.56tn as of June 2024 (due to under-recovery on petrol imports between August 2023 and June 2024), but this figure increased to N5.31tn by July 2024.

The NNPCL attributed the rise to fluctuations in foreign exchange rates and unresolved subsidy payments from previous months.

The total figure adds to concerns over the fiscal impact of subsidy payments on the Federation Account.

Exchange rate fluctuations and the rising cost of importing PMS have continued to strain government revenues, raising questions about the sustainability of the partial subsidy framework.

Committee raises concerns

The FAAC Sub-Committee raised concerns over NNPCL’s accounting practices, noting discrepancies in the figures submitted.

The NNPCL’s report included N1.19tn as a balance brought forward, contributing to the overall claim of N5.31tn.

However, the Sub-Committee noted that this amount had not been included in earlier FAAC reports and was therefore not recognised in its deliberations.

The report read, “As of June 2024, the Exchange Rate Differentials stood at N4,558,597,379,030.6. This amount increased to N5,309,418,715,637.13 as of the July 2024 Federation Account.

“Note that NNPCL’s request for the application of Weighted Average Rate covers the period August to June 2024. Also, recall that all outstanding payments against NNPCL as of May 2024 were referred to the Presidential Alignment Committee for reconciliation.

“However, the Sub-Committee observed that NNPCL in their report included the sum of N1,186,540,693,485.36 as an amount brought forward totalling N5,309,418,715,637.13 in their ledger. FAAC Postmortem did not recognize the Balance Brought Forward because it was not included in the FAAC report earlier submitted.”

During the September meeting with agencies, the NNPCL informed the FAAC Postmortem Sub-Committee that the N1.19tn figure was an actual under-recovery amount, which included adjustments for June and July 2024.

This amount, the NNPCL said, was used as the opening balance in its report.

In response, the Sub-Committee recommended that the NNPCL re-submit the figure for consideration at the next plenary.

The report noted, “During the monthly reconditioning meeting with Agencies, NNPCL informed the meeting that the amount submitted to the Presidential Alignment Committee for under-recovery was estimated. The actual under-recovery of N1,186,540,693,485.36, including June and July 2024, resulted in the opening balance in the NNPCL report.

“The Sub-Committee resolved that since NNPCL’s earlier report to FAAC did not include the sum of N1,186,540,693,485.36 brought forward, NNPCL should re-submit the amount for FAAC Plenary noting.”

Missing documentation

Further scrutiny of the NNPCL’s claims revealed additional issues. Minutes of a previous FAAC meeting indicated that as of June 2024, the NNPCL had reported an outstanding claim of N4.34tn against the Federation.

The claim, which was tied to exchange rate differentials, lacked essential details, including the volume of PMS imported, pricing, and sales values.

The Federal Commissioner of the Revenue Mobilisation, Allocation, and Fiscal Commission stated that the omission of these details made it difficult for the Sub-Committee to justify the figures submitted.

Consequently, the sub-committee directed the NNPCL to provide all relevant information to enable further assessment of its claims.

The FAAC Postmortem Sub-Committee has emphasised the need for transparency and accountability in subsidy-related reporting.

It noted that the discrepancies in the NNPCL’s submissions had delayed the reconciliation process, which had already been referred to the Presidential Alignment Committee.

The sub-committee also urged the NNPCL to ensure the inclusion of all outstanding amounts and a comprehensive breakdown of its PMS importation records in future reports.

The minutes for one of the FAAC meetings, which was seen by The PUNCH, noted, “The Federal Commissioner, RMAFC, informed the meeting that NNPC Limited reported to the Sub-committee that it had an outstanding claim of N4,344,519,176,167.32 against the Federation as a result of exchange rate differentials as at June 2024.

“He stated that the Sub-committee observed that the details of the PMS volume, price, and sales value were not provided in the June 2024 Report of NNPC Limited to justify the exchange rate differentials recorded. He concluded that the Sub-committee had resolved to request NNPC Ltd to provide the relevant information for further consideration.”

The PUNCH earlier reported that Nigerian National Petroleum Company Limited demanded a refund of N4.71tn from the Federal Government to settle outstanding debts used to import Premium Motor Spirit, popularly called petrol, into the country.

However, the NNPCL clarified that the N4.71tn was just an estimate, and the actual figure was N4.34tn, which increased to N5.31tn by July 2024.

This development means that the government has been supporting fuel imports by covering the difference between the projected rate and the actual expenses incurred by the NNPCL for importing petroleum products into the country.

This difference in cost, which ordinarily should be reflected in the retail price of the product and borne by final consumers, contradicts the government’s claims that subsidies have been eliminated.

This revelation also comes amid challenges faced by the petroleum company to ensure the adequate supply of PMS to marketers for distribution nationwide.

On May 29, 2023, during his inauguration, President Bola Tinubu publicly declared that “subsidy is gone,” signalling the end of barriers that had been restricting the nation’s economic growth.

However, this claim has been contested by the International Monetary Fund, the World Bank, and other authoritative figures, who argue that the government had quietly reintroduced fuel subsidies.

In June, a proposed economic stabilisation plan document stated that the government planned to spend about N5.4tn on fuel subsidies.

The N5.31tn demanded by the NNPCL for petrol under-recovery is about 98.33% of what the Federal Government had planned to spend on fuel subsidies this year.

Between January and June 2023, the Federal Government spent about N3.6tn on fuel subsidy, which was far more than the N2tn spent for the entire year of 2022.

In the approved Medium-Term Expenditure Framework, the Federal Government admitted that the petrol subsidies have remained a major challenge.

It noted that the final 2023 dividend for the Federal Government from the NNPCL was withheld to settle fuel subsidies.

The MTEF document noted, “Despite recent reforms, petrol subsidies continue to have a significant adverse impact on oil revenues. Recently, the 2023 final dividend due to the federation was withheld for payment of fuel subsidies.”

Amidst the increasing cost burden on the government for petrol under-recovery, and despite promising to bring down the price of petrol during his campaign, President Bola Tinubu has repeatedly increased petrol price by about 505.71 per cent – from N175 in May 2023 to N1,060 in October 2024 – inflicting more pains on the already impoverished Nigerians.

About N3.87 trillion has been allocated for recurrent expenditure across 13 Nigerian states in their proposed budgets for the 2025 fiscal year.

The governors of these states have presented budgets that prioritise administrative costs, including salaries and overheads, while also allocating significant funds for capital projects aimed at boosting infrastructure development.

The total proposed budget across the 13 states for 2025 stands at N9.07tn. Of this total budget, N3.87tn is allocated for recurrent expenditure, which covers the ongoing costs of running the government and providing essential services.

The remaining N5.845tn is directed towards capital expenditure, reflecting the states’ focus on long-term projects.

The figures provided in this report were derived from details of the budget submitted by the state governors to their respective State Houses of Assembly. The reports were posted on each state’s official website.

Recurrent expenditure refers to the regular and ongoing costs that a government or organisation incurs in the day-to-day running of its activities.

Capital expenditure, on the other hand, refers to the funds used by the government or an organisation for the acquisition or construction of long-term assets that will contribute to future growth and development.

In Lagos State, Governor Babajide Sanwo-Olu proposed a budget of N3.005tn, with N1.24tn allocated for recurrent expenditure, representing a portion of the total budget. The state also earmarked N1.76tn for capital expenditure, highlighting its focus on infrastructural development.

Bauchi State Governor, Bala Mohammed, presented a N465.09bn budget, with N182.74bn allocated for recurrent expenditure, which makes up 39.3 per cent of the total budget. The remaining N282.34bn is set aside for capital expenditure, underscoring the state’s commitment to development.

In Bayelsa State, Governor Douye Diri proposed a N689.4bn budget with N263.38bn earmarked for recurrent expenditure, accounting for 38.2 per cent of the total budget. A larger portion, N404.76bn, was allocated for capital expenditure.

Osun State Governor, Ademola Adeleke, presented a N390.03bn budget, allocating N245.8bn (62.9 per cent) for recurrent expenditure, with N144.23bn dedicated to capital expenditure.

Oyo State’s budget, presented by Governor Seyi Makinde, is N678.09bn, with N325.57bn allocated for recurrent expenditure. This represents 49.41 per cent of the total budget. The state has also proposed N349.29bn for capital expenditure.

Anambra State Governor, Charles Soludo, presented a N606.9bn budget with N139.5bn allocated for recurrent expenditure, representing 23 per cent of the total. A larger share of N467.5bn is dedicated to capital expenditure, though the state faces a projected deficit of N148.3bn.

In Gombe State, Governor Muhammadu Yahaya proposed a N320.11bn budget, allocating N111.09bn for recurrent expenditure and N209.02bn for capital expenditure.

Ekiti State Governor, Biodun Oyebanji, presented a N375.7bn budget, with N192.3bn (51 per cent) allocated for recurrent expenditure and N183.4bn (49 per cent) for capital expenditure.

Additionally, Cross River State Governor, Bassey Otu, presented a N498bn budget, with N170bn allocated for recurrent expenditure, representing 34 per cent of the total. The bulk of the budget, N328bn, is focused on capital expenditure, aimed at supporting infrastructure growth.

In Akwa Ibom, the state’s executive council approved a N955bn budget, with N300bn set aside for recurrent expenditure and N655bn for capital projects. This was disclosed in a statement issued by the state Commissioner of Information, Ini Ememobong after the council’s meeting presided over by Governor Umo Eno, on Wednesday.

Delta State Governor, Sheriff Oborevwori, presented a N936bn budget, allocating N348bn for recurrent expenditure and N587bn for capital expenditure.

Governor Caleb Mutfwang of Plateau State presented a budget estimate of about N471.1bn to the State House of Assembly for the 2025 fiscal year on Monday. In Plateau State, Governor Mutfwang proposed a N471.1bn budget, with N201.5bn allocated for recurrent expenditure, representing 43.46 per cent of the total budget. The capital budget estimate is N258.8bn, representing 56.54 per cent of the total budget.

Governor Dikko Radda of Katsina State on Monday presented the State’s 2025 Budget Proposal to the state House of Assembly. Katsina’s recurrent expenditure stands at N157.97bn, representing 23.15 per cent of the total budget, while capital expenditure is N524.27bn, representing 76.85 per cent of the budget.

Commenting, the Chief Executive Officer of Cowry Treasurers Limited, Charles Sanni, shared his insights, “The huge budgeted recurrent expenditures speak to the fact that little is available for capital projects. This will lead to capital investment rationing. A low capital expenditure budget simply tells us that not much growth and contribution to GDP will be expected because only significant capital budgets will promote economic, human, and social investments.”

He further suggested two primary options for improving the financial health of the states: “Cost optimisation—stop leakages, adopt strict budget control measures, and cut down on the size or cost of personnel, particularly political aides—and increasing internally generated revenue through more public-private partnership deals, multilateral organizations’ direct budget financing support, and diaspora engagement for special projects funding.”

An economist and investment specialist, Vincent Nwani, also weighed in, by stating that “the budget is small; some Nigerian universities’ annual budgets are even larger. It is too small for any significant development, and for infrastructure, it is still a small amount.

“What’s worse is that a large portion of the capital is being used for non-productive purposes, such as buying cars, instead of funding long-term projects that can drive economic growth. There are issues of corruption and a lack of transparency that need to be addressed. The states need to start generating more income to meet their obligations, as they have borrowed before and need to repay.”

The PUNCH reports that economic stakeholders have projected that the 2025 proposed budget of N47.9tn may underperform due to its bullish assumptions.

The Nigerian Labour Congress (NLC) has stated that the latest report by the National Bureau of Statistics on the country’s unemployment rate does not reflect economic realities.

NBS in its latest report stated that Nigeria’s unemployment rate declined to 4.3 per cent in the second quarter of 2024, signalling improved labour market conditions.

According to the report, this marks a decrease from the 5.3 per cent recorded in Q1 2024 and reflects a gradual recovery from the 5.0 per cent in Q3 2023.

Reacting to the development while speaking to Punch, the National Assistant General Secretary of the NLC, Chris Onyeka, labelled the report as a “voodoo document” that fails to reflect the stark realities Nigerians face daily.

Onyeka dismissed the claim that unemployment is decreasing, calling it a “fabrication designed to mislead the public.”

He argued that it was impossible for employment to be coming down while factories were closing.

He said, “Unemployment cannot be coming down in Nigeria when factories are closing shops.

“It cannot be coming down when there is increasing inventory and reduced consumer spending. If anything, unemployment is increasing.”

He further questioned the methodology behind the NBS report, describing it as a “figment of imagination concocted by people who want to manipulate figures.”

According to Onyeka, the lack of alignment between the data and visible realities on the ground undermines the credibility of the statistics agency.

“Once data does not reflect reality, it loses relevance. Unfortunately, the NBS has lost credibility as a result of the data they continue spewing out,” he stated.

Onyeka challenged the NBS to substantiate its claims by identifying the sectors supposedly generating jobs. “Where are the jobs coming from? Is it from employers who are complaining of consumer resistance and slowing economic activities? It doesn’t add up,” he remarked.

He likened the situation to what he described as “INEC-style manipulation,” a term he used to draw parallels between perceived shortcomings in Nigeria’s election management and the NBS figures.

“Nigerians can go to court if they don’t like the figures. But the truth remains: the NBS has become a failed institution, much like INEC in the eyes of the public,” Onyeka concluded.

Nigeria’s unemployment rate declined to 4.3 per cent in the second quarter of 2024, signalling improved labour market conditions.

According to the latest report released on Monday, by the National Bureau of Statistics, this marked a decrease from the 5.3 per cent recorded in Q1 2024 and reflected a gradual recovery from the 5.0 per cent in Q3 2023.

The Labour Force Participation Rate rose to 79.5 per cent, up from 77.3 per cent in the previous quarter, highlighting increased workforce engagement.

The Employment-to-Population Ratio also showed significant improvement, climbing to 76.1 per cent in Q2 2024 from 73.2 per cent in Q1 2024.

This indicates that a higher proportion of the working-age population was gainfully employed during the period.

Also, self-employment remained dominant, accounting for 85.6 per cent of total employment, an increase from 84 per cent in the preceding quarter.

Informal employment also rose slightly to 93.0 per cent, highlighting the economy’s reliance on informal jobs.

Urban unemployment stood at 5.2 per cent, a reduction from 6.0 per cent in Q1 2024.

However, rural areas recorded an even lower unemployment rate of 2.8 per cent, compared to 4.3 per cent in the previous quarter.

This disparity highlights the continued role of agriculture and informal activities in rural employment, contrasting with the urban dependence on formal and service-driven jobs.

The youth unemployment rate (ages 15–24) dropped significantly to 6.5 per cent, compared to 8.4 per cent in Q1 2024.

The report further revealed gender disparities, with the unemployment rate for females at 5.1 per cent, compared to 3.4 per cent for males.

This suggests a need for targeted gender-inclusive policies to bridge the employment gap.

The report read, “The unemployment rate is defined as the share of the labour force not employed but actively searching for and available for work.

“Unemployment is one of the components of labour underutilisation. The unemployment rate for Q2 2024 was 4.3 per cent, showing an increase of 0.1 percentage point compared to the same period last year.

“The unemployment rate among males was 3.4 per cent and 5.1 per cent among females.

“By place of residence, the unemployment rate was 5.2 per cent in urban areas and 2.8 per cent in rural areas. Youth unemployment rate was 6.5 per cent in Q2 2024, showing a decrease from 8.4 per cent in Q1 2024.”

Time-related underemployment, which measures workers seeking additional hours, dropped to 9.2 per cent in Q2 2024 from 10.6 per cent in Q1.

Labour underutilisation metrics also improved, with LU2 (unemployment and time-related underemployment) decreasing to 13.0 per cent from 15.3 per cent in the previous quarter.

LU3 and LU4 metrics, which include potential labour force participation, also recorded declines to 5.9 per cent and 14.5 per cent, respectively.