Oil Price Fall: Nigeria Loses $62.8m In One Month
• States Plan Downward Review Of Political Appointees’ Perks
• Economic Expert Harps On Revenue Leakage Blockage
THE crude oil price slump globally has continued to take its toll on Nigeria’s revenue, leading to loss of over $62.8 million revenue between November and December last year.
And the development has led to a further dip in part of the country’s fiscal buffers – the Excess Crude Account (ECA) slid further down from its $3.1 billion level last month to $2.49billion.
The dip followed another withdrawal from the account by the joint Federal and States Federation Accounts Allocation Committee (FAAC) Friday to buoy the low revenue generation for the month of December which was distributed Friday. The value of the deduction from the account in Naira value was N15.631 billion which boosted the amount distributed yesterday to N580.378 billion.
Minister of State Finance, Ambassador Bashir Yuguda who is also the FAAC Chairman, told journalists at the end of the FAAC meeting that following the withdrawal, what is left in the ECA is now $2.49 billion. He added that the imagined effect of the consequence of the crude oil price fall has really begun to take effect on Nigeria.
He spoke as states in Nigeria yesterday said following dwindling revenue from the Federation Account, they have begun strategizing on how to cut down on the cost of governance at their level, including the downward review of perks to political appointees and the abolition of food imports as a way of saving funds.
A Development Economist, Mr. Odilim Enweagbara, asked the Federal and State Governments to tighten the noose round internal revenue generation leakages as a way of improving the country’s revenue base.
While the states spoke through Mr. Timothy Odah who is the Chairman of States’ Finance Commissioners’ Forum at the FAAC Meeting, Mr. Enweagbara, who equally spoke in Abuja, was reacting to the country’s worsening liquidity situation.
The Accountant General of the Federation (AGF) Mr. Jonah Otunla at the FAAC Meeting gave an insight into the oil revenue crash and the reason for the further withdrawal of funds from the ECA.
“The gross revenue of N490.031 billion received for the month of was lower than the N500.076 billion received in the previous month by N10.045 billion. A 12 per cent drop in crude oil prices from $87.8 million in October to $77.5 million in November leading to $62.8 million in revenue loss and a 52 per cent loss in volume coupled with 31 per cent price drop culminating in a total revenue loss from the LPNG/NLG October sale all contributed negatively to the Federation Equity,” Otunla said.
He continued: “The persistence of the Force Majeure declared by Shell since June, 2014 and the shut down and shut-in of trunks and pipelines at various terminals also impacted negatively on the revenue performance. Also, non-oil revenue dipped due partly to the fact that the timeline for the payment of taxes by many companies is yet to fall due.
“Accordingly, the distributable statutory revenue for the month is N474.400 billion. The sum of N6.330 billion was refunded by NNPC to the Federal Government of Nigeria (FGN).
“Also, there is exchange gain again of N10.551 billion which is proposed for distribution . Additional amount of N15.631 billion from ECA is proposed for distribution. The total revenue distributable for the current month including VAT is N580.378 billion”.
A breakdown of the revenue distributed indicated that the Federal Government went home with the sum of N220.484 billion from the Statutory Revenue, representing its 52.68 per cent share and another sum of N10.579 billion from the VAT window; the States, N111.832 billion, representing their 26.72 per cent share of the statutory revenue and another N35.264 billion from the VAT revenue stream while the 774 local councils in the country are to share the sum of N86.218 billion of the Statutory Revenue , which represents their 20.60 per cent share under the revenue formula and another sum of N10.759 billion from VAT pool.
Oil-bearing communities also went home with the sum of N47.221 billion, representing 13 per cent of derivation principle.
Meanwhile, the Chairman of Finance Commissioner’s Forum and Commissioner representing Ebonyi State at the FAAC, Mr. Timothy Odah has declared that because of the dwindling revenue stream of income from the Federation Account, states are left with no option than to review perks attached to political appointees at that level as well as changing their consumption appetite as a strategy to remain afloat and carry out the function of governance.