Federal Government asks states to submit projects for subsidy re-investment fund

The Federal Government on Friday directed the 36 states of the federation to submit to it a list of projects on which they plan to spend their allocation from the N426billlion subsidy reinvestment fund savings for the year.

Minister of State for Finance, Yerima Ngama, who gave the directive at the end of the Federation Accounts Allocation Committee (FAAC) meeting for the month of April in Abuja, also announced the decision to separate the sharing and management of the fund from the normal monthly statutory allocation to the three tiers of government.

The fund, which was as a result of the partial deregulation of the pump price of premium motor spirit (PMS), or petrol, following the failed attempt by the Federal Government early this year to remove the subsidy on the commodity, is to be paid into a special account to be opened by each of the state government for that purpose.

Though the minister allayed fears that the directive was a ploy to dictate to the states what to utilise their allocations on, he said each state government was however at liberty to either initiate fresh projects that would help alleviate the suffering of the people as a result the policy, or align with the Federal Government in the implementation of its projects in their domains.

“Total amount budgeted for Subsidy Re-investment Fund for the year when the budget was being prepared was N968billion based on certain assumptions, including $90 per barrel crude oil price and fuel consumption volume,” he said. 

“However, when the Federal Government resorted to partial deregulation, the actual provision for subsidy in the budget came to N888billion. When this is added to N426billlion, the total subsidy savings for the year is N1.314trillion, which translates to about N35.549billion every month to be shared to the three tiers of government.”

A breakdown of the allocations shows that the Federal Government would take home N15billion every month, in addition to about N309million, being one per cent allocation for the Federal Capital Territory (FCT), while the 36 states would get N12.885billion, to be distributed according to their normal revenue sharing formula, and all the Local Governments N6.377billion.

“Other allocations are transfers to the Stabilisation Account and the Federal Government share of the Development of Natural Resources Account. 

“Henceforth, allocations to the various tiers of government for the Subsidy Re-investment Fund have been disaggregated from the monthly statutory allocations to the three tiers of government,” he said. “The allocation should be paid to the states and local governments separately into a special account they are to open. 

“The Federal Government expects them to also forward to the Ministry their programmes they intend to use the reinvestment fund for, in order to alleviate the economic situation of the people to provide the basic requirements. 

“The states are free to determine what it wants to do with its reinvestment fund. If they do not have a programme, they can complement what the Federal Government is doing in their states. The policy would be sustained in subsequent months to ensure transparency and accountability on the management of the fund.”

Meanwhile, the committee shared allocation of about N560.537billion between the three tiers of government, out of a total of about N626.178billion that accrued to the Federation Account from mineral and non-mineral revenue sources for the month of April.
Mr. Ngama, who said the total revenue realised was below about N726.73billion receivd last month by about N100.594billion, said about N180.638billion was however transfered to the Excess Crude Account (ECA).

A breakdown of the total amount distributed to the three tiers of government was N460.759billion, excluding about N7.617billion paid by the Nigerian National Petroleum Corporation (NNPC) as refund for the N450billion indebtedness to the Federation Account.
 
Out of the figure, the Federal Government getting  N216.436billion, while the 36 states got N109.779billion and Local Governments N84.635billion, with N49.908billion paid as 13 per cent oil derivation revenue to oil producing states.

In addition, about N64.229billion was realised from Value Added Tax (VAT), which was distributed in the ratio of Federal Government, N9.634billion; states, N32.115billion, and Local Government N22.480billion.

He attributed the decline in revenue earnings for the month to a dip in domestic crude oil sales, despite improved oil production and lifting in Shell’s Bonga and ExxonMobil’s Qua Iboe oil terminals.

 

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