Another windfall is soon to come the way of states, and the Federal Capital
Territory (FCT).
The Federation Account Allocation Committee (FAAC) has recommended
that N92.8 billion in withholding taxes collected on their behalf be shared amongst
them.
The sum will be transferred to their accounts after a reconciliation exercise
involving revenue agencies that made the collections.
The recommendation followed complaints by some states that withholding taxes
collected on their behalf were being paid into the Federation Account without
proper reconciliation.
According to a report of the FAAC Post Mortem Sub-Committee for February
2026, the states wrote to the committee and RMAFC requesting a review of
outstanding withholding taxes collected for them by the Federal Inland Revenue
Service (FIRS), now operating as the Nigeria Revenue Service (NRS).
To resolve the matter, the Revenue Mobilisation Allocation and Fiscal
Commission (RMAFC) engaged a firm, SMD Consulting, to carry out
the reconciliation with the NRS.
SMD Consulting was said to have found out that N92.8 billion is due to the states
and the FCT as withholding tax refunds.
The report indicated that the amount would be refunded after the
agreed consultancy fee is deducted
The FAAC Post Mortem report also provided updates on many ongoing financial
reviews related to the Federation Account, including the use of the 30 percent
deductions set aside by the Nigerian National Petroleum Company Limited (NNPC
Ltd) for frontier oil exploration.
According to the report, the national oil company has already submitted
documentation showing the work carried out in various frontier basins as well as
the funds spent on the projects.
However, an ad-hoc committee set up by the FAAC has also planned site visits to
some of the exploration basins to verify the projects and ensure transparency and
accountability.
The sub-committee handling the matter said it is awaiting report from the ad-hoc
committee, noting that the verification process is ongoing.
The FAAC Post Mortem report further presented details of revenue remittances
made by major government agencies into the Federation Account in December
2025.
According to figures drawn from the Central Bank of Nigeria (CBN) Federation
Account component statement, total revenue available for distribution in December
2025 stood at N2.6 trillion.
A breakdown of the remittances showed that the NBS VAT account contributed
the largest share, amounting to about N913.96 billion, representing 35.35 per cent
of total revenue for the month.
The NBS also remitted about N685.90 billion, representing 26.53 per cent of the
total amount.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) contributed
about N593.11 billion, which accounted for 22.94 per cent of the total.
In its part, the Nigeria Customs Service (NCS) remitted approximately N342.94
billion, representing 13.26 per cent.
The NRS Electronic Money Transfer Levy account contributed N39.9 billion,
while remittances from the NNPC Ltd were about N9.79 billion, representing 0.38
per cent of the total revenue recorded during the period.
The report also indicated that N4.17 billion was generated from the solid minerals
sector in December 2025, while the balance in the Solid Mineral Account stood at
N68.14 billion as of November 2025.
Further updates were provided on payments made under the Project Gazelle
funding arrangement linked to crude oil financing.
Project Gazelle is a $3.3 billion structured crude oil-backed forward-sale finance
facility sponsored by the NNPC Ltd. to boost foreign exchange liquidity.
Arranged by Afreximbank, the deal involves the national oil firm supplying 90,000
barrels of crude per day to a Special Purpose Vehicle (SPV) to repay the loan.
According to the report, N5. 7 trillion was paid from the Project Gazelle escrow
account between April 2024 and December 2025.
Out of this amount, N2.115 trillion was paid to the NUPRC, while N3.561 trillion
went to the NBS.
The report explained that the funds were subsequently distributed to the three tiers
of government through the Federation Account.
However, the FAAC Post Mortem sub-committee said it directed the relevant
agencies to provide detailed information on the actual dollar payments made under
the Project Gazelle arrangement as well as the outstanding balance.
The aim, according to the report, is to determine when the loan linked to the
financing structure will be fully repaid.
The commission also provided an update on deductions made under the Road
Infrastructure Tax Credit Scheme, which allows companies to finance road
construction in exchange for tax credits. An ad-hoc committee is currently
reviewing the deductions and approved expenditures under the scheme.
The report stated that a consultant engaged to examine the deductions is expected
to present findings to the committee before the final report is submitted to the
FAAC plenary.
Another issue under review involves allegations that NNPC Ltd may have under-
remitted about $42.4 billion to the Federation Account.
The report noted that the national oil company and Periscope Consulting were
asked to reconcile their records and present a unified report to the FAAC’s sub-
committee.
However, representatives of NNPCL informed the committee that the two parties
have not yet reached an agreement on the figures.
According to the company, it maintains its earlier position that it does not owe any
outstanding amount to the Federation Account.
The sub-committee handling the issue has directed both parties to continue
discussions and report back before the next FAAC plenary meeting this month.
The report also disclosed that N707.2 billion in revenue is currently undergoing
reconciliation between revenue-generating agencies and the Federation Account.
A breakdown of the outstanding amount shows that about N480.74 billion is
linked to reconciliation between the NUPRC and NNPC Ltd.
Another N225.42 billion relates to reconciliation between the NBS and the
national oil company. In addition, ₦1.03 billion is still being reconciled directly
with NNPC Ltd.
The report said these figures remain under review during the monthly
reconciliation meetings between the agencies and the FAAC sub-committee.
According to the report, unresolved payments dating back to periods before June
2023 were referred to a stakeholdersalignment committee, while the second phase of the reconciliation exercise extended the review period to December 2024. However, the sub-committee noted that it is still waiting for the final report of the stakeholders alignment committee in order to conclude the reconciliation process.
FAAC officials say the ongoing reviews are aimed at ensuring greater
transparency and accountability in the management of funds that accrue to the
Federation Account and are shared among the Federal Government, states and
local governments.
