Abuja, Nigeria – Following the scourge of piracy, oil theft and shut-ins by crude oil producers that has negatively affected government income, the Nigerian government withdrew a total of US$1 billion from the nation’s Excess Crude Account (ECA) to buoy its dwindling revenue.
From nearly US$ 10 billion in its coffers in December, 2012, the nation’s ECA, the joint Federal Government and States Account, where excess crude oil revenue earnings are kept for special intervention at critical periods, has crashed to US$ 3.598 billion.
The approval, by President Goodluck Jonathan, for the withdrawal of the US$ 1 bIllion from the ECA has reportedly excited the States which have been groaning under the tight financial system following the slowdown in oil revenue.
The Chairman of Nigerian State Finance Commissioners’ Forum, Mr. Timothy Odah, said, “we are grateful to Mr. President for his magnanimity in the approval. This is not revenue augmentation because we have stopped that since August this year. What the President just did was to boost our take home revenue following the dismal financial performance by the NNPC.
“This intervention will greatly boost our revenue bases and enable us to meet some of our obligations. On our part, we are diversifying our revenue bases so that we do not continue to depend on the nation’s oil company because it has failed to meet our expectations.”
Meanwhile, the Federation Accounts Allocation Committee (FAAC) has approved the distribution of the sum of N568.413 billion being statutory revenue generation for the month of October; the Value Added Tax receipt; the N35 billion Sure-P fund and the N7 billion NNPC N450 billion earlier withheld revenue.
A breakdown of the distribution indicated that the Federal Government’s 52.68 per cent share as outlined in the Sharing formular amounted to N213.825 billion, less by N78.392 billion it collected last month.
The States’ 26.72 per cent share was N108.455 billion, less by N39.762 billion in comparison with last month’s receipt, while the local councils are to share N83.614 billion representing 20.60 per cent of their entitlement in the statutory revenue.
The oil producing States are to share N47.112 billion being 13 per cent of the entire oil revenue for the month.
From the VAT revenue window, the Federal Government is to receive an additional N9.554 billion; the Sates N31.846 billion and local councils, N22.292 billion.
The Coordinating Minister for the Economy and Minister of Finance, Dr (Mrs.) Ngozi Okonjo-Iweala, said that if the trend of oil theft, shut ins and pipeline vandalisation in the nation’s Niger Delta continues, crude oil revenue loss to Nigeria may go up to US$ 12 billion per annum.
This high revenue loss forced a compromise between the Federal Government and the States to abandon the monthly budgeted revenue estimates for distribution of funds to States as the estimate has hardly been met for a long time.
This also forced the Federal Government to look for funds from other sources to augment the amount for distribution to the three tiers of government.
Following the understanding reached last August, it was agreed that revenue distribution should henceforth be based only on available revenues generated for that month and not the monthly budget estimate.