States governments under the Federal Account Allocation Committee (FAAC) Postmortem Sub-Committee have expressed concern on the growing scale of deductions from federation revenues, including power-related subsidy obligations, debt write-offs, and operational costs deducted at source.
In a communique issued at the end of a 3-day retreat in Enugu State, the committee said it considered these practices inconsistent with transparency, budgetary discipline, and constitutional intent.
The federal government had proposed a N3.6 trillion deduction from the Federation Account to fund electricity subsidies in 2026, 2027, and 2028, a move designed to distribute the financial burden across federal, state, and local governments.
The deduction proposal, detailed in the Medium-Term Expenditure Framework Fiscal Strategy Paper for 2026–2028 reflects a strategic shift toward distributing the financial burden of the power sector across all tiers of government, amid growing concerns over unsustainable debts and systemic inefficiencies.
The communique which was contained in the February 2026 FAAC documents said the members unanimously observed that persistent revenue leakages, opaque deductions, institutional inefficiencies, and weak oversight continue to erode distributable revenues:
The participants while acknowledging that the Petroleum Industry Act (PIA) 2021 offers opportunities for improved governance and clarity in the oil and gas sector, however, raised serious concerns on the transfer of Joint Venture assets to the Nigeria National Petroleum Company (NNPC) Limited, management fees, Production Sharing Contract (PSC) profit oil administration, and the Frontier Exploration Fund.
They said these developments were observed to have materially reduced inflows into the Federation Account and weakened oversight.
The Retreat emphasised that transparency, accountability. and oversight are indispensable to closing revenue leakages.
They also expressed grave concern over crude oil-backed borrowing arrangements and opaque crude-for-product swaps, including Project Gazelle and the Direct Sale Direct Purchase (DSDP) scheme.
