Trouble for Naira as FG, states finally share N1.275tn revenue for August, Sept

It is more trouble for naira as the three tiers of government in the country have finally shared the accruals for August and September. State finance commissioners evinced joy Friday as the sum of N1.275 trillion were shared in one fell swoop. Analyst fear that this development might fuel another demand pressure on dollar stock as the states usually invade the foreign exchange market each time they get their shares from federal revenue. Close to two months now, many of them have encountered difficulties in meeting their workers' wages and contractors' commitment following the inability of the Federation Accounts Allocation Committee (FAAC) to distribute Federally generated revenue as a result of a face-off between the Federal Government and the States over statutory revenue arrears owed States. The net statutory disbursements to the federal government was N484,429,000,000 or (52.68%); the 36 states and the Federal Capital Territory (FCT) N245,708,000,000 or (26.72%) and the 774 Local Government Areas including the six Area Councils of the FCT N189,431,000,000 or (20.6%). Of the N1.19 trillion is N127,661,000,000 Value Added Tax (VAT) proceeds for the two months distributed among the federal government (N19,149,000,000); states (N63,831,000,000) and Local governments (N44,682,000,000). N35,549,000,000 was shared from the Subsidy Reinvestment and Empowerment Programme (SURE-P) by all the tiers of government and an additional N7,617,000,000 from the continued monthly instalmental payment from the Nigeria National Petroleum Corporation (NNPC). The FAAC also withdrew from the Excess Crude Account and Petroleum Profit Tax account the sum of N18.383 billion earlier posted to that account in line with the statutory revenue distribution framework, for sharing by the three tiers of government. The amount normally represents 10 per cent of crude oil proceeds for the month. Yerima Lawan Ngama, Minister of state for finance and chairman of FAAC said the month of September witnessed a drop in revenue which accrued into the federation account by N22.783 billion 'due to the slight decline in crude oil production as a result of Force Majeure declared at Brass Terminal, maintenance issues and theft.' The minister also disclosed that the NNPC has so far made 27 monthly instalmental payment of N7.617 billion to FAAC as agreed, leaving six outstanding instalmental payments to offset all that it owes FAAC. The breakdown of the revenue is as follows: for August, the sum of N642.329 billion was declared while N614.336 billion was declared for September. Then there was an additional N18.383 billion fund, which was meant to be saved under the Excess Crude Oil Account, Petroleum Profit Tax and Royalty Proceeds Profit Account but which was equally reverted and put forward for sharing. The Accountant -General of the Federation, Mr. Jonah Otunla who is the FAAC Secretary said in the Communique explaining the chart of revenue distribution: 'The gross revenue of N525.610 billion received for the month was lower than the N548.393 billion received in the previous month by N22.783 billion. This was due to the slight decline in crude oil production as result of a force majeure declared at Brass Terminal, maintenance issues and theft activities.' He added: 'The distributable statutory revenue for the month is N507.227 billion. No augmentation was proposed for the month. The sum of N7.617 billion refunded by the NNPC is also distributed. In addition, the sum of N35.549 billion is proposed for distribution under the Sure-P programme. The total revenue distributed for the current month (September), including VAT is N614.336 billion. Otunla said: 'It was proposed that the N18.383 billion transferred to the Excess Crude Oil Account, Petroleum Profit Tax and Royalty Proceeds Profit Account be reverted and added to the statutory distributable amount for sharing.' Last month, the states turned down revenue allocation for the month of August, insisting that the federal government must clear all outstanding statutory revenue arrears, which arose following shortfall in revenue as a result of the drop in the quantity of crude oil production in the Niger Delta. The Federal Government has had to be augmenting the differences, which piled the arrears until last month when it came out to tell the states that there was no more money to be augmenting the shortfall. After exhaustive deliberations, a compromise was reached, namely, that from September, this year, only the actual revenue collected would be shared and not the budget estimates or projection. The state governments have decried the Central Bank of Nigeria's (CBN) directive of 50 per cent compulsory public sector deposits to banks, which has constrained their ability to source funds from banks for pressing projects. The Chairman of Commissioners forum, Timothy Odaah, who spoke to journalists after the FAAC meeting, said the apex bank's directive was 'giving states a harsh experience as banks are no longer eager to extend facilities to states without the say-so of the CBN among other negative effects. Odaah said the state governors would present their misgivings on the compulsory deposit to President Goodluck Jonathan at the next National Executive Council (NEC) meeting to look for ways to bail the states out of economic difficulties.