“FAAC Meeting Turns Bloody as State Representatives Strongly Object to NNPC’s Stance on Road Construction”

State governments are pushing back against the Nigerian National Petroleum Company Limited (NNPCL) after revelations that the company deducted $525.09 million from its remittances to the Federal Inland Revenue Service (FIRS) under the Road Infrastructure Tax Credit Scheme (RITCS). The deductions, which took place between February and November 2024, have triggered fresh demands for transparency and a refund of the withheld funds.

State Governments Protest Unilateral Deductions

According to a Federation Account Allocation Committee (FAAC) report from a January 2025 post-mortem sub-committee meeting, NNPCL deducted $52.51 million per month from its Joint Venture Gas and Company Income Tax obligations. The deductions were made under the RITCS, a government initiative allowing private companies to invest in critical road projects in exchange for tax relief.

However, state representatives at the FAAC meeting strongly objected, arguing that road construction falls under the responsibility of the Federal Government. They insisted that their share of the deducted funds should be computed based on the existing revenue allocation formula and refunded to them.

FAAC’s Push for Accountability

In August 2024, FAAC members called for an immediate halt to the deductions. Their stance was reaffirmed during the FAAC plenary session in Bauchi, where they demanded full disclosure from FIRS regarding tax credits granted to NNPCL and other corporations under the scheme.

A FAAC report summarizing the states’ position stated:

“The Sub-National position was that it is the responsibility of the Federal Government to construct roads; hence, the share of the Sub-National should be computed based on the existing Revenue Allocation Sharing Formula and refunded to them.”

A Critical Infrastructure Funding Model Under Scrutiny

The RITCS was introduced as a mechanism to accelerate road construction and rehabilitation by leveraging private sector investment. The initiative has been instrumental in funding projects like the 32-kilometre Apapa-Oshodi-Oworonshoki-Ojota expressway.

Under the scheme, companies can offset their infrastructure investment costs against tax obligations, easing the burden on public finances. While the program has led to significant improvements in road networks, the lack of clarity regarding deductions from FAAC revenues has fueled tensions.

Key Concerns from State Governments

1. Revenue Sharing Dispute: States argue that the deducted funds should have been distributed through FAAC, rather than being used for a federal infrastructure initiative.
2. Federal vs. State Responsibilities: The states contend that road construction is the duty of the Federal Government, not oil companies.
3. Transparency Demands: FAAC has formally requested FIRS to provide detailed records of tax credits granted under the RITCS, particularly those allocated to NNPCL.
4. Calls for Refund: States are demanding their fair share of the deducted funds be reimbursed based on the revenue allocation formula.

What Happens Next?

As the controversy unfolds, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has been tasked with reviewing the tax credit allocations and reporting back to FAAC. The outcome of this review will determine whether states receive any refunds or whether the current tax credit framework will be revised to address concerns of transparency and fairness.

For now, the states remain firm in their demand: No deductions should be made from FAAC revenues without clear justification and proper consultation with all tiers of government.