BY VICTORIA ONU, ABUJA
Revenue remittances into the Federation Account may decline by the end of this month as the Nigerian National Petroleum Corporation plans to deduct the sum of N170.43bn from allocations to the Federation Accounts Allocation Committee.
The NNPC confirmed the development in its monthly report, which was presented to members of FAAC on July 14, this year.
The Committee, headed by the Minister of Finance, Zainab Ahmed, is made up of Commissioners of Finance from the 36 states, representatives of revenue generating agencies such as NNPC, Federal Inland Revenue Service, Department of Petroluem Resources, Central Bank of Nigeria, and the Nigeria Customs Service, among others.
The Federation Account is currently being managed on a legal framework that allows funds to be shared under three major components.
They are statutory allocation, Value Added Tax distribution and allocation made under the 13 per cent derivation principle.
Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments, 20.60 per cent.
The framework also provides that Value Added Tax revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 35 per cent.
Similarly, extra allocation is given to the nine oil-producing states, based on the 13 per cent derivation principle.
A copy of the NNPC report, which was obtained by The Point, showed that the NNPC recorded 29.37 per cent increase in Crude Oil lifting, from 9.42 million barrels per day in April, to 11.58Mbbls.
It said crude oil export revenue received in June 2021 amounted to N4.5bn, while domestic gas receipts in the month was N37.4bn.
The report reads in part, “The sum of N114,337,097,352.49 being the value shortfall arising from the difference between the landing cost and ex-coastal price of PMS recorded in May 2021, plus the N50bn arrears of March 2021, was applied on the Gross Domestic receipts before arriving at the net receipt of N47.16bn.
“The June, 2021 value shortfall of N170,435,950,434.47 is to be deducted from the July, 2021 proceeds due for sharing at the August, 2021 FAAC meeting.”
With the continuous push for subsidy, the NNPC has been made to bear the burden of subsidy payment through the reintroduction of under-recovery.
The implication of this is that with the under-recovery element of cost being borne by the NNPC with subsidy reintroduction, the amount that is being remitted by the Corporation into the Federation Account has been significantly reduced.
For instance, the statutory payments made by the NNPC to the Federation Account, a joint pool operated by the local, state and federal governments, declined by over 63 per cent in the first five months of 2021.
An analysis of the data from NNPC showed that the corporation was only able to remit N225.85bn, out of the prorated total sum of N613.83bn.
A breakdown of the N225.85bn showed that the NNPC remitted N90.86bn in January, N64.16bn in February and N41.18bn in March.
While the Corporation did not remit any amount in April, it was able to pay the sum of N29.647bn into the Federation Account in May.
The Minister of Finance, Zainab Ahmed, had, during the public consultation of the Medium Term Expenditure Framework/Fiscal Strategy Paper for 2022-2024, described the amount spent on subsiding petrol as a drain on the economy.
She said that a whopping sum of N900bn would be spent next year in subsidising the price of Premium Motor Spirit, adding that such would have been spent on more productive sectors of the economy such as health, education and infrastructure.
Ahmed said, “This is costing us big time.
We are spending over N150bn on subsidy, that means NNPC has to use that amount of money to pay for PMS and distribute it. That is money that the federation account can share.
“This is money that could have been available for education, health and infrastructure, that could have reduced our borrowing, increase the amounts that states and local governments are collecting.
“We are being penny wise pound foolish to think that by giving this subsidy, that citizens are benefitting. But by the end of the day, the citizens are actually the ones that are carrying the brunt of the wealthy.”
The finance minister lamented that while subsidy was supposed to be enjoyed by the poor, those that were actually benefiting from it were the rich people in the society.
She added, “Some (the rich) have two, three, four cars and they are the ones that we are subsidising. It is not helping the farmer who needs a bus from his farm to the market.
“But we need to get rid of subsidy completely, although it is not a popular view with labour. Right now, we are subsidising consumption in Nigeria; we sell at N165 per liter when our neighbours are selling at N500 per litre. It is only the marketers that are benefiting by taking this product from Nigeria and selling it across borders. The common man is not benefiting.”
