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Oil Price Drop, Production Losses Cut Monthly Revenue to N502bn

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IMAGE: Mr. Timothy Odah, the minister or the Chairman, Finance Commissioners of Nigeria, »


The slide in the price of crude oil as well as production losses occasioned by shut-ins and the shut-down of trunk lines at various oil terminals resulted in a N99.55 billion drop in Nigeria’s September revenue to N502.09 billion from the N601.64 billion generated in the previous month.

Non-mineral revenue also dropped to N127.35 billion compared to N159.73 billion in August partly because some blue chip companies had made payments and returns in September.

Nevertheless, total distributable revenue amounting to N603.59 billion was shared on Wednesday among the three tiers of government for the month of September compared to N611.70 billion in August.

Addressing journalists in Abuja  after the monthly meeting of the Federation Account Allocation Committee (FAAC), the Minister of State for Finance, Alhaji Basir Yuguda, said mineral revenue for the month under review also declined to N374.74 billion compared to N441.91 billion in August.

Revenue from value added tax (VAT) also dropped to N61.51 billion compared to NN65.10 billion in the previous month.

It was unclear if there was some augmentation to shore up the shortfall, as this was neither highlighted by the minister or the Chairman, Finance Commissioners of Nigeria, Mr. Timothy Odah.

In the breakdown, which was obtained by THISDAY, it showed that “in addition to the N30 billion receipts from the Nigerian National Petroleum Corporation (NNPC), the sum of $2.769 billion meant to be transferred to the Excess Crude Account (ECA) be distributed to augment the shortfall in revenue”.

Had the transfer been made to the ECA, the account would have increased to $6.8 billion.
Odah, however, during the briefing, said the need for the diversification of the economy as well as the removal of the fuel subsidy, which the states had been agitating for, had become imperative.

Nevertheless, there was a disagreement between the federal and state governments over the figures presented for sharing among the tiers of government at the FAAC meeting, thereby prolonging the meeting till last night.

One of the nagging issues reported to have caused the discord was the outstanding debt owed by NNPC to the Federation Account.

Consequently, the meeting was forced to break midway to allow the state finance commissioners consult with their governors on how to resolve the impasse.

One of the commissioners confided in THISDAY that the figures of the Federation Accounts presented by the finance ministry for consideration at the meeting appeared inaccurate, thereby forcing the states to reject the sum proposed for sharing by the tiers of government.

Another source confirmed to THISDAY that while the commissioners demanded the sharing of $2.7 billion that was meant for the ECA in September, the federal government held a different view.

Yuguda and other federal government top officials were said to have canvassed the no-sharing option based on the view that the country's savings should be beefed up to mitigate against any likely shock on the economy in the event earnings from crude oil exports decreased further.

However, the state commissioners were said to have been completely opposed to the federal government’s position, claiming that the state governments needed more funds now to sustain various projects and programmes targeted at improving essential services in their states.

On the repayment of NNPC’s outstanding debt, the state representatives were said to have insisted that the federal government should make a full disclosure of how much had been transferred to the Federation Account so far with a view to updating them on the current state of the corporation’s debt.

The source said: “The issues of the ECA and NNPC's debt were discussed and took up a lot of time. As you noticed, it was part of the impasse that the state commissioners stepped out for a few minutes to try to find a way around the knotty issues.”

He added: “One could project that their going back to the meeting allowed the committee to resolve the disagreement between the states and the federal government officials, particularly on the $2.7 billion meant for the ECA, which the states said they needed very badly.”

In a related issue, the Chairman, Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) Mr. Elias Mbam yesterday expressed regrets that the joint state and local government council accounts are often being manipulated by the state governors.

He also advocated a separate account general, distinct from that of the federal government to manage the Federation Account to allow for more transparency.

Speaking in Abuja yesterday while receiving a delegation of the Oversight Implementation Committee of the Kenyan Parliament, he said the constitution recognised three tiers of government as the main beneficiaries of the Federation Account.

But while the statutory allocation from the Federation Account due to the federal and state governments are credited to them directly, that of local governments are expected to be paid to respective State Local Government Joint Account established by Section 162(6) of the constitution, he said.

“These joint accounts are often subjected to manipulation by state supervisory authorities, thus rendering the local governments financially incapacitated,” he pointed out.

Mbah further decried the lack of financial autonomy of the commission which, according to him, hampers its operations, stressing that the sensitive nature of RMAFC’s role in Nigeria's fiscal management required a large measure of independence, including financial autonomy.

He said having a separate accountant general, distinct from the one appointed for the federation, would promote transparency, accountability, checks and balances, as well as trust among the three theirs of government and other beneficiaries of the Federation Account.

Responding, the leader of the Kenyan delegation Mr. Njoroge Baiye said there are several development policies, which could be borrowed from Nigeria and implemented in Kenya.

Article Credit: Thisdaylive

Updated 4 Years ago

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Tags:     Crude Oil     FAAC     Alhaji Basir Yuguda     VAT     Mr. Timothy Odah     NNPC     Mr. Elias Mbam