Non-remittance of N3.8tr: Is NNPC justified in law?

I believe that the simple question involved is whether, having regard to Section 7(4) of the NNPC Act 1977 and Section 162 of the 1999 Constitution of the Federal Republic of Nigeria, or any other relevant law, the NNPC is entitled to “defray its expenses” out of its gross income before paying the balance into […]

I believe that the simple question involved is whether, having regard to Section 7(4) of the NNPC Act 1977 and Section 162 of the 1999 Constitution of the Federal Republic of Nigeria, or any other relevant law, the NNPC is entitled to “defray its expenses” out of its gross income before paying the balance into the Federation Account.
In my opinion, the NNPC is, indeed, legally bound to pay its entire/gross income or revenues into the Federation Account, and it may only defray its expenses after: (a) They have been appropriated by the National Assembly (b) The  Minister of Finance has authorised such payment vide warrants issued to the Accountant-General of the Federation.
My position is predicated on the following statutes: (i) Sections 21 and 53 of the Fiscal Responsibility Act 2007 (ii) Regulations 103 & 301 of the Financial Regulations Act 2009 (iii) Sections 3, 5 & 6(1) of the Finance (Control & Management) Act 1958 (iv) Section 7(5) of the NNPC Act
(v) Sections 44(3), 80, 81 & 162(1) & (10) of the 1999 Constitution. It can be seen that nothing in the foregoing statutes or any other law whatsoever authorizes the NNPC to settle its debts and expenses unilaterally, without appropriation by the National Assembly or the authorisation of the Minister of Finance as aforesaid. I submit that Sec. 7(4) of the NNPC Act, 1977, on which the Corporation hinges its aforesaid practice, confers no such right, and is simply an enabling provision which merely empowers it to “defray its expenses.” It provides thus: “The Corporation shall maintain a fund, which shall consist of (a) Such monies as may, from fine to time, be provided by the Federal Government for the purposes of this Act by way of grants or loans or otherwise howsoever (b) Such monies as may be received by the Corporation in the course of its operations or in relation to the exercise by the Corporation of any of its functions under this Act, and from such fund there shall be defrayed all expenses incurred by the Corporation.”
It is obvious that this law does not authorise the NNPC to defray its expenses unilaterally, without the authorisation of either the National Assembly or the Minister of Finance, which we believe is the fallout of its defraying its expenses out of its gross income before paying the balance into the Federation Account. Assuming, without conceding that Section 7(4) of the NNPC Act authorizes the Corporation to settle its debts and expenses before remitting the balance of its income into the Federation Account, I submit that it would be inconsistent with Section 162 of the 1999 Constitution. It is trite law that the constitution is supreme and any law that is inconsistent with it will be invalid, null and void, to the extent of the inconsistency.
The correct approach to the interpretation of Section 7(4) of the NNPC Ac, is to construe it subject to the provisions of Sections 21 and 53 of
the Fiscal Responsibility Act, Sections 44(3), 80, 81 & 162 of the Constitution and Regulations 103 and 301 of the Financial Regulations 2009. I submit that when that is done, the irresistible conclusion would be that while the NNPC is entitled to maintain a fund from which it may defray its expenses, it may only do so upon appropriation of funds for that purpose by the National Assembly and warrants by the Minister of Finance directing the issuance of those funds from the Consolidated Revenue Fund of the Federation. Accordingly, the ongoing practice of the NNPC utilising the proceeds of the sale/transfer of the petroleum/hydrocarbon assets of the country to defray its expenses, is inconsistent with Sec. 53 of the Fiscal Responsibility Act, which specifically prohibits that practice.
In conclusion, I submit that the combined effect of the aforesaid statutory provisions is the following: (1) The NNPC must submit the estimates of its revenues and expenditures annually to the president through the Minister of Finance, who will include them in the draft Appropriation Bill to be submitted to the National Assembly for consideration and passage as the Appropriation Act or the annual budget (2) The NNPC  must  pay  its  entire/gross  revenue  or  income  into the Federation Account, and it may only defray its expenses out of its budget as passed by the National Assembly; and then, only upon the authorisation of the Minister of Finance through warrants issued to the Accountant-General of the Federation.
(3) The practice of the NNPC of incurring extra-budgetary expenditure out of its revenues, purportedly relying on Sec. 7(4) of the NNPC Act, is inconsistent with the spirit and letters of the aforesaid statutes and the constitution. We submit that that practice will defeat the purpose of Sec.
21 of the Fiscal Responsibility Act, in particular, which is to ensure that  the  Corporation  only  incurs  expenditure  that  is appropriated by the National Assembly in an annual budget (4)  The answer to the question posed above, therefore, is that the NNPC ought to have remitted the said sum of N3.8 trillion into the Federation Account, as it belongs to all the federating units – federal, state and local governments, and not the NNPC.
Abubakar Sani writes from Kano