A Force Majure declared in Bonny was the major reason for the loss of about N260.512 billion in August.
Despite the amnesty program of the Federal Government, granted to militants in the Niger Delta region, crude oil theft and illegal bunkering in the region has led to a major decrease in Nigeria’s earnings for August.
The August earnings decreased by about N260.5 billion from that of July, the Accountant General of the Federation, Jonah Otunla, said on Friday at the end of the monthly Federation Accounts Allocation Committee (FAAC) meeting. Nigeria earned N564.884 billion in August, while she earned N825.396 billion in July.
The decreased earning, according to the accountant, was due to “a drop in crude oil production and lifting operations as a result of Force Majure declared at Bonny Terminal.”
Force Majure is a declaration which frees an oil company from all contractual obligations to its customers due to unforeseen circumstances. Oil giant, Shell, usually declares Force Majure in Bonny Terminal when there is crude oil theft and illegal bunkering by militants on its facilities.
Other reasons for the reduced earnings, Mr. Otunla stated, include “shutdown of Balema Gas Plant and Trans Niger Pipeline as well as decrease in Production Sharing Contract (PSC) and Modified Carry Arrangement.”
The accountant general stated that N440.792 billion is the statutory revenue that is distributable among the tiers of government for the month.
“There is augmentation of N26.214 billion as a result of the shortfall in revenue. In addition, the sum of N35 billion is proposed for distribution under the SURE-P programme,” he said.
“Also distributed is the N7.617 billion refunded by Nigerian National Petroleum Corporation. The total revenue distributable for the current month (including VAT) is N527.743 billion. There was exchange gain of N367.425 million,” he added.
A further sectoral analysis of the revenue accruals showed that both the mineral and non-mineral sectors suffered serious decline, with the mineral revenue sliding by about N194.63 billion from the N646.47 billion earned in July to N451.85 billion.
Similarly, the non-minerals revenue recorded a shortfall of about N65.89 billion, to about N113.04 billion in August from N178.92 billion in the preceding month.
Excess Crude Account increased
Also speaking at the end of the meeting, the Minister of State for Finance, Yerima Ngama, said Nigeria’s Excess Crude Account, ECA, increased in the month of August to $8.03 billion.
Mr. Ngama said the figure represented over $1billion in excess of the level of savings in the account last June.
The accrual appears to underline the point that attempts by managers of the country’s economy to implement tight fiscal and monetary policies aimed at achieving economic stability are already yielding results.
The Federal Government decided to keep the ECA to enable revenue earnings from the sale of crude oil at the international market, above a determined price ceiling, be saved so as to provide succour in times of declining economic fortunes.
The Federal Government reached an agreement with the other tiers of government on a $10 billion target for the ECA by the end of the year, as part of steps to achieve a stronger financial system stability.
“This is to ensure that, at any time, there would be enough revenue to take care of the allocations to the tiers of government for at least two months,” Mr. Ngama said.
The ECA is also meant to create a strong buffer for the economy in the face of the increasing volatility of the international oil market, and depressive signals from the global economic environment.
Mr. Ngama said the imperative of shoring up the ECA base was for government to create a fall-back position against the ugly debt crisis situation in the Euro zone, Asian and American economies.
“The Excess Crude Account is supposed to serve as a buffer for the economy,” he said. “Whenever available revenue is not up to the budgeted figure, government will augment for the health of the economy.”
The Minister of Finance, and Coordinating Minister for the Economy, Ngozi Okonjo-Iweala, had said that the ECA would run concurrently with the Sovereign Wealth Fund, which is conceived by government to hold savings for strategic infrastructural and national development purposes.
FG, States, LG share N570.6 billion
Mr. Ngama also said that the growth in the ECA is coming as the three tiers of government shared about N570.61 billion for the month of August after about N564.89 billion was realised as gross revenue, excluding earnings from the value added tax (VAT).
The total amount shared, over the gross revenue yield, was met through augmentation with about N26.21 billion used to make up for the shortfall in revenues that accrued in the Federation Account during the month.