FG, states settle rift over revenue sharing


The meeting of the Federation Accounts Allocation Committee (FAAC) for the month of October ended on a positive note on Monday, as the 36 states and the Federal Capital Territory (FCT) sheathe their swords after two months of protracted disagreement with the Federal Government over issues bordering on certain deductions from their monthly allocations from the federation account.

To facilitate the take-off of the proposed Sovereign Wealth Fund (SWF) by the Federal Government, about $1billion is required as seed money to be contributed by our three tiers of government.

Similarly, the Nigerian National Petroleum Corporation (NNPC) had unilaterally withheld the payment of about N450billion from its operations into the Federation Account since 2008 without any approval, the states claimed.

However, representatives of the 36 state governments and the FCT early this year queried the authority of the Federal Government to order the deduction of the $1billion seed fund for the SWF without due consultation with all stakeholders contrary to the provisions of the Constitution, which gives independence to the component units of the federation on the use and management of their share of revenue from the federation account.

The states were also miffed that the Federal Government did not demonstrate enough commitment to compel its agency, the NNPC, to pay back the N450billion withheld from the Federation Account for more than two years, thereby denying them the necessary funding to carry out development projects in their states.

But the Minister of State for Finance, Yerima Ngama, who announced at the end of the meeting in Abuja that all issues underlining the conflict have been resolved, said apart from the decision to share about N615.757billion for the month of October, the Federal Government also agreed to release $2billion from the excess crude account for the states to facilitate the completion of ongoing projects.

“With that, we believe that the various projects that have been started will be completed to put this economy on the path of growth,” Mr Ngama said. 

He disclosed that the meeting was adjourned last week to enable further consultations on the issues.

The minister noted that the states were no longer comfortable with the soaring cost of doing business and providing services as a result of the continued subsidy of petroleum products, pointing out that a situation where the subsidy keep increasing every month is making the burden unbearable for the states who find the cost unjustifiable.

“For sometimes, we have been deliberating on this issue of petroleum subsidy. The states are not comfortable with the rising cost of fuel subsidy. The government has it as a policy to subsidize petroleum products, but because of the increasing amount of pump price and the fact that our own fuel pump price is fixed, we end up in a situation where the subsidy has been increasing from month to month.

“The burden has become unbearable to the states, because whatever resources we raise, we have an obligation to see how to make use of our own revenue, either for payment of subsidy or for the provision of our physical infrastructure and social services for our citizens. The states believe that total amount devoted to subsidy is so high and not justifiable,” he said.

On the sharing of revenue, Ngama said distributable statutory revenue for the month was N440.471 billion, showing a decrease of N112.672billion, or 20%, when compared to that of September 2011. 

In addition, the minister said the sum of N113.398billion was proposed as augmentation as a result of the shortfall in distributable revenue, while gross revenue available from the Value Added Tax (VAT) was N51.640billion, as against N60.739 billion distributable in the preceding month, a decrease of N9.099billion.

Total distributable revenue for the month, including VAT, stood at N603.444billiion, a decrease of N8.009billion, or 1.13% compared to the amount distributed in September 2011, adding that an exchange gain of N4.046billion was as a result of the difference between the average rate exchange and the budgeted rate.

A breakdown of the statutory payments showed that the Federal Government got N250.18billion, while the states received N139.17billion and the local government areas N101.744billion.


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