FAAC disbursed N1.945trn to FG, states, LGs in Q1, 2020 – NEITI

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*Minister of finance, budget and national planning, Mrs. Zainab Ahmed

The Nigeria Extractive Industries Transparency Initiative (NEITI) has said in its latest report that the Federation Accounts Allocation Committee (FAAC) disbursed N1.95 trillion to the federal, states, local government areas and other statutory agencies in the first quarter of 2020.

In the report released in Abuja yesterday the federal government got N791.4 billion, the 36 states shared N669 billion while about N395 billion was shared by the 774 local government areas in the country.

NEITI, in the report, which covers January-March 2020, said the balance went to the North East Development Commission (NEDC), the Excess Crude Account (ECA), Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS) and the Department of Petroleum Resources (DPR).

The agency stated that the Q1 2020 FAAC disbursements were the highest first quarter disbursements since 2014, compared to N1.648 trillion in Q1 2015, N1.132 trillion in Q1 2016, N1.411 trillion in Q1 2017, N1.938 trillion in Q1 2018, and N1.929 trillion in Q1 2019.

The report, which was signed by NEITI’s director of communications and advocacy, Dr Ogbonnaya Orji, explained that the total FAAC allocations during the period under review comprised gross disbursements to the federal government, states, local government councils and the 13 per cent derivation as well as cost of collections by the NCS, the FIRS, DPR and other allied handling charges.

NEITI noted that from the previous years, with the exception of 2018, the general trend since 2015 had been that total disbursements fell in the second quarters, before rising in the third quarter, noting that with the Covid-19 pandemic, it is almost certain that total disbursements will fall in the second quarter of 2020.

“On FAAC disbursements to states between January and March this year, there was a wide disparity between states as Osun State with the lowest allocation received N6.44 billion and Delta State with the highest disbursement received N52.03 billion, a difference of 708 per cent.

“Delta State’s net FAAC disbursements were higher than the combined total net disbursements of N50.67 billion of the six lowest receiving states, comprising Osun, Cross River, Plateau, Ogun, Ekiti and Gombe.

“Further analysis revealed that combined disbursements to four states (Delta, Akwa Ibom, Rivers and Bayelsa) with the highest net FAAC disbursements were higher than the combined net disbursements for the 17 states with the lowest disbursements.

“The combined total net disbursement to these four states was N167.76 billion. This figure is higher than the combined total of N159.99 billion received by the 17 lowest receiving states (Osun, Cross River, Plateau, Ogun, Ekiti, Gombe, Zamfara, Kwara, Nassarawa, Ebonyi, Taraba, Benue, Adamawa, Bauchi, Abia, and Kogi),” it stated.

According to the report, 31 states received less than N20 billion as total net FAAC disbursements in the first quarter of the year while only five states received more than N20 billion.

The states were Lagos (N26.23 billion), Bayelsa (N35.14 billion), Rivers (N39.99 billion), Akwa Ibom (N40.61 billion) and Delta (N52.03 billion) respectively.

Furthermore, the review disclosed wide disparity in the amounts deducted from the states as their debt obligations, with Lagos State having the highest deductions of N14.92 billion, while Yobe had the lowest deductions of N820.18 million.

NEITI also made some projections on the possible impacts of Covid-19 on government revenues.

“In light of the ‘double whammy’ of declining oil demand and oil prices as a result of the Covid-19 pandemic, government revenue would likely continue to fall in subsequent months.

“As global crude oil prices plummet in the midst of the global oil supply glut arising from lockdown of economic activities in many countries of the world, all tiers of government will struggle to fund their 2020 budgets,” it said.

NEITI projected revenue for the federal government for the year as N8.42 trillion, comprising oil revenue of N2.64 trillion, non-oil revenue of N1.81 trillion, and revenue from other sources of N3.97 trillion, adding that oil remained the dominant single source of revenue, with the figure of N2.64 trillion making up 31.35 per cent of total projected revenue.

“The interesting point to note is that while the share of oil revenue represents the direct revenue, there are also indirect sources of revenue from oil. These include signature bonus and renewals and share of dividend from NLNG. In addition, taxes and customs duties, which are based on economic activities will suffer in the light of the lockdown of the major activity hubs of the country,” it added.

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