By Obioma Ezenwobodo
Recently, the Federal Government unilaterally approved a debt waiver for the Nigerian National Petroleum Company Limited (NNPC Ltd), amounting to $1.42 billion and N5.57 trillion owed to the Federation Account, without recourse to the National Assembly for approval.
The NNPC Ltd, by its corporate structure, is a limited liability company incorporated under the Companies and Allied Matters Act, 2020, and whose shares are fully owned or subscribed by the Federal Government of Nigeria by virtue of Section 53(1) of the Petroleum Industry Act, 2021. By virtue of Section 53(7), the NNPC Ltd is mandated to conduct its affairs on a commercial basis profitably and efficiently without recourse to government funds, and declare dividends to its shareholders and retain 20% of profits as retained earnings to grow its business. On remission of profits made during operations, Section 64(c) of the Act provides that the NNPC Ltd shall promptly remit its profits to the Federation, less its 30% for management fee and Frontier Exploration Fund.
Based on the above statutory provisions, the NNPC Ltd, as a business concern, should not depend on the Federal Government for its funding but should make profits, declare dividends to its shareholders (the Federal Government), retain some percentage, and remit others to the Federal Account. This is in strict fidelity to provisions of Section 162(1) and (2) of the Constitution of the Federal Republic of Nigeria (CFRN), 1999 (as altered), which authorises such revenues to be paid into the Federation Account and be distributed to the component units of the Federation upon the approval of the National Assembly.
Thus, the issue of what comes in or goes out of the Federation Account is not within the exclusive preserve of the President/Executive Arm to make alone but jointly with the consent or approval of the National Assembly/Legislative Arm in consonance with the democratic principle of checks and balances. Therefore, the action of the President unilaterally waiving a huge chunk of the NNPC Ltd’s debts owed to the Federation Account, without the consent or approval of the National Assembly, is not in tandem with the clear provisions of the Constitution and the enabling Act. As a matter of fact, such an action encourages corporate laxity on the part of NNPC Ltd in contravention of the provision of Section 61 of the Petroleum Industrial Act, 2021, that mandates the NNPC Ltd to apply the principle of corporate governance in managing its affairs as a business concern.
Most importantly, Item 50 in the Second Schedule (Part 1- Exclusive Legislative List), CFRN, grants the National Assembly exclusive power to legislate on the ‘Public debt of the Federation’, which the NNPC Ltd debts fall into. It is therefore curious that a waiver was extended to the NNPC Ltd debts without the involvement of the National Assembly, which has the constitutional power to act on same. This is contrary to the fiscal responsibility policy as provided by Section 48(1) of the Fiscal Responsibility Act, 2007, to the effect that the Federal Government shall conduct fiscal and financial matters transparently.
It is an earnest expectation and call for the Federal Government to review the waiver granted to NNPC Ltd on its debts for lack of constitutional and legal legitimacy.
Obioma Ezenwobodo LLM.
Managing Partner, Resolution Attorneys.
Pioneer Chairman, Nigerian Bar Association, Garki Branch, Abuja (2022/24)
The views expressed by contributors are strictly personal and not of Law & Society Magazine.
