Economic Confidential, March 14, 2009

NEWS UPDATE

Federation Account Shares N250b and $1.5b in March ‘09

The Federation Accounts Allocation Committee (FAAC) has approved the sharing of N250.04 billion and $1.5 billion from Foreign Excess Crude among the three tiers of government as its meeting in 2009 which was held in Makurdi, Benue State.

Babalola, who briefed journalists at the end of the Committee’s meeting, disclosed that the amount distributed was made up of Statutory Allocation of N215.86 billion and five per cent Value Added tax of N34.18 billion.

The three tiers of government had in the preceding month shared N285.58 billion, made up of Statutory Allocation of N241.33 billion and VAT of N44.25 billion.

He said, “The total amount declared and recommended for distribution is N250.04 billion in addition to the sum of $1.5 billion. The $1.5 billion was proposed for distribution from the Foreign Excess Crude Savings Account to all tiers of government.”

The National Economic Council (NEC) had on March 10, 2009 approved that the sum of $1.5 billion be shared among the federal, state and local governments from the excess crude account.

The release of the money is aimed at cushioning the effects of the slide recorded in the federal allocations in January and February, this year.

Also speaking at the news conference, Dankwambo disclosed that the $1.5 billion excess crude would be shared in its naira equivalent.

Dankwambo explained, “No matter how much is shared from the Federation Account, it is based on a sharing formula. For the $1.5 billion from the foreign excess crude, the Federal Government will get 52.68 per cent; States, 26.72 per cent; and Local Government Councils, 20.6 per cent. We also have 13 per cent set aside for the oil producing areas.”

He attributed the deficit of N35.54 billion in the revenue allocation to the three tiers of government, when compared with revenue shared in January 2009, to the decline in crude oil prices in the international market and the reduction in production quota of the Organisation of Petroleum Exporting Countries (OPEC), a body which Nigeria belongs to.

According to him, Nigeria’s production quota was cut-back to 1,673,000 barrels per day (bpd) in January 2009 from 2,050,000 bpd in December 2008.

“In addition, there was also a complete shut down of Tebidaba Flow Station and subsequent loss of about 30,000 bpd as a result of another attack by militants,” he added.

A statement signed by the AGF revealed that N2.77 billion and N1.51 billion were paid to Federal Inland Revenue Service and Nigeria Customs Service, respectively, being four and seven per cent cost of collection.

Out of the Statutory allocation of N215.86 billion, the Federal Government received N102.53 billion (about 52.68 per cent), a decline of N12.15 billion when compared with the N114.68 billion it received in the preceding month.

The 36 State Governments got N52 billion (about 26.72 per cent) from statutory allocation, a drop of N6.17 billion as against the previous month’s receipt of N58.17 billion, while the 774 Local Government Councils were allocated N40.09 billion.

The 13 per cent derivation accounted for the balance of N21.24 billion and was re-distributed among the nine oil producing states of Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers.

The States received the lion’s share of the VAT amounting to N17.09 billion (about 50 per cent), a decrease of N5.03 billion when compared with the preceding month’s level of N22.12 billion.

The States were closely followed by the Local Government Councils which received N11.96 billion (about 35 per cent), while the Federal Government’s VAT amounted to N5.13 billion.