Nigeria's oil revenue earning drops again

The country’s revenue earnings from crude oil exports witnessed another fall in May, as government says it would resume the payment of oil subsidy claims by fuel marketers on imported petroleum products next month.

Minister of State for Finance, Yerima Ngama, said at the end of the Federation Accounts Allocation Committee (FAAC) meeting in Ibadan on Tuesday that gross revenue yield from crude oil exports for the month declined by N46.87billion from about N633.79billion received in April to about N586.92billion.

Though the Minister attributed the decline to a drop in crude oil export for the month as a result of the shutdown of various oil terminals in the Niger Delta either for routine repairs and maintenance or disruptions as a result of sabotage, its consistency in the last three months has heightened fears that all may not be well with the country’s finances.

In April, the monthly FAAC meeting, where allocations are distributed to the three tiers of government and the Federal Capital Territory (FCT), could not hold on schedule as the Nigerian National Petroleum Corporation (NNPC) reportedly was unable to remit revenue earning from its operations into the Federation Account.

One of the multi-national oil companies reportedly came to the country’s rescue with a $2billion loan.

In March, the country experienced a similar trend as earnings decreased by about N45.28billion, from about N631.96billion recorded in February to about N586.63billion “as a result of operational and safety issues experienced in Bonga, Brass, Bonny and Qua Iboe oil terminals.” 

But, the minister gave a flicker of hope as he told reporters that revenue accrual in the Excess Crude Account (ECA) at the end of last month now stands at $5.3billion (about N900billion) after about N86.39billion was transferred to the reserve by the Federal Government. 

Details of the revenue for the month showed that distributable statutory allocation was about N461.67billion, an increase of about N20.5billion, or 4.2 per cent when compared to the figure in April.

Of this amount, the Federal Government got N218.24billion, or 52.68 per cent; the 36 states and the FCT would share N110.69billion, or 26.72 per cent, while the 774 local governments would share N85.34billion.

Similarly, the nine oil producing states in the Niger Delta would share about N47.39billion based on the 13 per cent oil derivation principle.

In addition, he said N57.68billion was shared as Value Added Tax (VAT) revenue, with N8.65billion, or 15 per cent expected to go to the Federal Government, states N28.84billion, or 50 per cent, while local government councils will share N20.18billion, or 35 per cent.

Mr. Ngama also said that N35.54billion was proposed for sharing under the Subsidy Re-investment and Empowerment Programme. 

On fuel subsidy payment, Mr. Ngama said the process, which suspended two months by Minister of Finance and the Coordinating Minister for the Economy, Ngozi Okonjo-Iweala, pending the reconciliation of accounts as well as adoption of a new strategy to ensure prudence and accountability in the management of the fuel subsidy budget, is to resume next week.

He said though government provided N232billion for payment of subsidy arrears in the 2012 budget, about N451billion has so far been disbursed as arrears to oil marketers for 2011 alone. 

The enable government verify and ascertain subsidy arrears paid to oil marketers, a committee, led by the Group Managing Director, Access Bank Plc, Aik Imuokhede, was constituted to look at the payment records. 

Mr. Ngama said the committee has already concluded its assignment and would submit its report before the end of this week.

Apart from the N451billion already paid as subsidy to oil marketers, the Minister said additional N50billion was recently released by government, thus bringing the subsidy bill this year to N501billion so far.

The implication is that of the N888billion provided for in the 2012 budget for subsidy payment, only N387billion is left to take care of such bills for the rest of the year.

“In the month of May, just like April, government did not pay any amount for subsidy,” the Minister said. “This is because we stopped the payment of fuel subsidy because we felt there was a need to carry out a reconciliation of the payments.

“I am glad to inform you that the committee that was asked to do that assignment has completed its work and the report will be sent to the Federal Government this week. As this committee submits its report, it therefore means that the ministry will from next month resume the payment of subsidies to oil marketers.”







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