Friday, April 18, 2014

Crude Oil theft, others reduce money shared by governments to N573bn in November

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Petroleum Minister Diezani Alison-Madueke had suggested the refinery sales

More money was shared by the three tiers of government in October than November.

Crude oil theft, maintenance of oil terminals, and declaration of force majeure, were the main reasons why the money shared by the three tiers of government, in Nigeria, in November is less than that of October.

In spite of a marginal increase in the Excess Crude Account, ECA, for November, the three tiers of government received allocations that was N2 billion less than the total amount shared in October.

The accruals in the Excess Crude Account rose slightly to about $9.66 billion, from the balance of about $9.5 billion in October.

The Accountant General of the Federation, AGF, Jonah Otunla, said at the end of the Federation Account Allocation Committee, FAAC meeting in Abuja on Wednesday that the Federal, State, and Local Governments, as well as the Federal Capital Territory, FCT, agreed to share a total of about N572.9 billion.

According to the Accountant General, the approved revenue distribution is about N2 billion lower than what was shared in the preceding month by the three tiers of government.

Mr. Otunla told reporters that the shortfall in revenues during the month was as a result of several disruptions in crude oil production and lifting operations during the period as a result of the force majeure declared by ExxonMobil in the wake of the leakage and fire outbreaks at Trans Niger; as well as Crude oil theft and maintenance work and Qua Iboe, Brass and Forcados oil export terminals.

He said total accruals from the statutory revenue source during the month under review was N569.5 billion as against the N640.77 billion grossed in the preceding month.

The deficit variance of about N71.31 billion, he said, necessitated the decision to augment the distributions with about N59.138 billion to make up for the budget benchmark in this year’s budget.

The budgeted revenue distribution for the month, inclusive of cost of collection to revenue agencies, stood at about N574.402 billion, an amount higher than the distributions by about N1.51 billion.

A breakdown of the shared revenues showed that distribution from Statutory revenue stood at N407.86 billion, while value added tax, VAT, accounted for N62.73 billion.

Others are allocations for SURE-P programme, about N35.55 billion, and refund by the Nigerian National Petroleum Corporation, NNPC, in respect of the N450billion debt to the Federation Account, N7.62 billion.

“The distributable statutory revenue for the month is N407.868 billion,” Mr. Otunla said. “There is augmentation of N59.138 billion as a result of the shortfall in revenue for the month. Also distributed is the N7.617 billion refunded by NNPC.

“In addition, the sum of N35.549 billion is proposed for distribution under the SURE-P Programme. The total revenue distributable for the current month (including VAT) is N572.895 billion,” he said.

On the persistent agitation by state governments for the ECA accruals to be shared, particularly their latest demand that $1 billion should be shared from it, Mr. Otunla said since the Federal and States had always resolved fiscal issues of that nature through dialogue, the latest demand by the states would be amicably resolved.

In his remarks after the meeting, Chairman of the Finance Commissioners’ Forum, Timothy Odah, justified the state governments’ new demand, saying that even if it considered it reasonable to keep building up the ECA, “you don’t keep saving for a rainy day when the roof of your house is already blown off.”

He assured that the money, if shared after an agreement by the federal and state governments, would be judiciously utilised by “the state governments to meet pressing demands that will positively impact on the welfare of the people.”

The Excess Crude Account had risen to $8.4 billion in September, up from the $8.03 billion as at the end of August 2012 when the Committee transferred N1.24 billion to the account.

Total transfer to the Account in the month of November was about $100 million.

The Federal Government, through consensual agreement with other tiers of government, had last June set a $10 billion target for the ECA by the end of the year as part of steps being taken to achieve a stronger financial system stability and create a strong buffer for the economy in the face of the increasing volatility at the international oil market and depressive signals from the global economic environment.

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