An energy policy and public finance advocacy group has rejected claims by the African Democratic Congress (ADC) that President Bola Ahmed Tinubu’s approval of the reconciliation and removal of certain Nigerian National Petroleum Company Limited (NNPC) legacy balances from the Federation Account was unconstitutional or financially detrimental to states and local governments.

The Centre for Energy Governance and Public Finance Accountability (CEGPFA) made its position known on Friday at a press conference in Abuja, describing the ADC’s claims as misleading and detached from the fiscal and legal history surrounding the disputed balances.

Speaking at the event, held in Abuja, the centre’s executive director, Dr Julius Osagie Eromonsele, said the balances in question were not revenues generated under the current administration but long-standing accounting entries accumulated over several decades, many of which predated the Petroleum Industry Act.

According to Eromonsele, the disputed figures arose from unresolved production sharing contract disputes, domestic crude supply obligations linked to the former fuel subsidy regime, royalty assessment disagreements and long-standing reconciliation gaps between the national oil company, regulators and revenue agencies.

He said these balances had remained on the Federation Account records for years despite repeated audits raising concerns about their accuracy, legal enforceability and likelihood of recovery, creating what he described as a distorted picture of public finances at the federal, state and local government levels.

Responding to suggestions that the balances were arbitrarily written off by presidential directive, Eromonsele said the approval followed a structured reconciliation process involving relevant fiscal and regulatory institutions, with the outcomes presented to the Federation Account Allocation Committee.

He said official reconciliation showed that about $1.42 billion and N5.57 trillion were removed from the Federation Account records after being identified as duplicated, overstated, unsupported by verifiable documentation or no longer legally recoverable. He stressed that the exercise applied only to legacy balances accumulated up to December 31, 2024.

Eromonsele maintained that reconciliation should not be interpreted as the cancellation of valid revenue, describing it instead as a standard public finance practice aimed at aligning accounting records with legal and economic reality. He added that no cash was withdrawn from the Federation Account and that allocations already made to states and local governments were not reversed.

Addressing constitutional concerns raised by the ADC, the centre argued that Section 162 of the Constitution applies to revenues that are lawfully due and payable, not to disputed or extinguished claims that lack legal backing. It warned that maintaining inflated receivables undermines fiscal discipline, budget credibility and revenue predictability for subnational governments.

The centre said the reconciliation was consistent with reforms introduced under the Petroleum Industry Act, which restructured NNPC Ltd as a commercial entity operating under international accounting and reporting standards.

While acknowledging the political sensitivity of the decision, the group said the approval by Bola Ahmed Tinubu reflected a preference for fiscal accuracy over what it described as convenient but misleading revenue projections. It urged political actors and stakeholders to engage the issue responsibly and support reforms aimed at improving transparency and accountability in Nigeria’s energy revenue management.