The Nigerian National Petroleum Company Limited (NNPCL) has sparked controversy by deducting a staggering $525.09 million from its remittances to the Federal Inland Revenue Service (FIRS) under the Road Infrastructure Tax Credit Scheme (RITCS)—a move that has infuriated state governments and ignited calls for transparency and accountability.
The deductions, made between February and November 2024, were revealed in a Federation Account Allocation Committee (FAAC) report following a January 2025 post-mortem sub-committee meeting. NNPCL reportedly withheld $52.51 million per month from funds meant for Joint Venture Gas and Company Income Tax, using them to finance road infrastructure under the RITCS.
State representatives at the FAAC meeting have vehemently opposed the deductions, arguing that road construction is the exclusive responsibility of the Federal Government and that funds meant for revenue distribution should not be unilaterally diverted for infrastructure projects.
During an August 2024 FAAC meeting, members demanded an immediate suspension of the deductions and called for a refund of their rightful share based on the existing revenue-sharing formula. The issue resurfaced in Bauchi during a plenary session, where FAAC members insisted on greater transparency and fairness.
The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has since stepped in, formally requesting a breakdown of the tax credits granted to NNPCL and other companies under the scheme from FIRS.
Why Did NNPCL Deduct $525 Million?
The Road Infrastructure Tax Credit Scheme (RITCS) allows private sector players to fund critical road projects in exchange for tax credits, which reduce their tax liabilities. NNPCL leveraged this initiative to invest in infrastructure projects and offset the costs against its tax obligations.
While this approach aims to accelerate road construction and reduce government expenditure, states argue that:
The deducted funds belong to the Federation Account and should have been equitably shared among federal, state, and local governments.
Road construction falls under the Federal Government’s jurisdiction, not a burden to be placed on state-shared revenues.
The lack of transparency in awarding tax credits under the RITCS raises concerns about fairness and accountability.
As tensions mount, state governments are pressing for a comprehensive review of the RITCS deductions. With FAAC members standing their ground, this dispute could trigger a legal or policy showdown between the federal and state governments.
Meanwhile, the RITCS has played a crucial role in financing major infrastructure projects, including the 32-kilometre Apapa-Oshodi-Oworonshoki-Ojota expressway. However, with state governments now pushing back, the future of such tax credit-funded projects may be thrown into uncertainty.
The ball is now in the court of the Federal Government, NNPCL, and FIRS—will they address states’ grievances, or will this financial storm escalate into a national crisis?
PIONEER NEWS 