Nigeria: Govt Earns N2.475 Trillion from Excess Crude in 2008

WITH the power sector in comatose and other infrastructure in decay, it has come to light that N2.475 trillion was saved in the excess crude account last year, according to figures made available by officials of the Federation Account Allocation Committee.

This is in reaction to dwindling allocations to the three tiers of government, highlighted in Vanguard’s lead story of last Friday.

However, the entire amount has since been shared by the three tiers of government. With oil prices cascading in the international market since the last quarter of 2008, accruals into the Excess Crude Account have dwindled, up to the point that there was none last month.

Of the amount, N1.475 trillion was shared among the three tiers of government following earlier agreement between them that any amount above N1trillion or 80 per cent should be shared while only 20 per cent is sa

The budget benchmark for crude oil in 2008 was $65 per barrel.

According to the official figures, in January 2008, N253.291billion was transferred to the excess crude account.

In February, N258.528 billion was saved while in March, N176.919 billion was transferred to the account as revenue from oil sale that was above the 2008 budget benchmark.

According to official figures, in April, N145.52 billion was saved and in May, the figure rose to N171.13 billion.

The excess crude account was boosted in June by N280 billion savings from oil sales and it rose further to N364 billion in July.

The monthly savings in the excess crude revenue account dropped to N300.19 billion in August and dropped further to N214 billion in September at the start of the global financial meltdown when prices of crude nosedived.

The amount dropped again to N209.21 billion in October and further down to N52.73 billion in November and 49.04 billion in December, thus bringing the total transfer to the excess crude and petroleum profit tax and royalty account to N2.475trillion.

Figures for 2009 are still being compiled as at the time of writing this story.

According to the figures made available to Vanguard, FG, states and LGs shared N5.446 trillion from the Federation Account in 2008.

Revenue amounting to N5, 446,032,479,115 was disbursed among the three tiers of government from the Federation Account in 2008 by the Federation Accounts Allocation Committee (FAAC), chaired by the Minister of State for Finance, Mr. Remi Babalola.

Statutory allocations, according to the details accounted for N3, 967,537,513,900 (about 72.8 per cent) of the total revenue distributed last year from the Federation Account.

Budget augmentation through the Domestic Excess Crude Savings Account amounted to N1,073,967,165,897 and five per cent Value Added Tax (VAT) of N404,527,809,317 were also distributed from the Federation Account.

The Federation Account is a pool account where all federally collected revenues are paid as required by the 1999 Constitution and distributed among the federal, state and local governments.

The Federal Government had in 2008 projected an aggregate receipt of N4.529 trillion into the Federation Account.

Oil-related revenue was expected to amount to N3.606 trillion or 80 per cent of this sum while non-oil sources of revenue were to account for the balance of N923 billion or 20 per cent.

Of the N5.446 trillion distributed from the Federation Account in 2008, the Federal Government received N2.213 trillion (about 40.6 per cent) made up of statutory allocation of N1.705 trillion, budget augmentation of N453.16 billion and VAT of N54.368 billion.

The 36 states and the Federal Capital Territory were paid N1.992 trillion, which include statutory allocation of N1.396 trillion, budget augmentation of N398.618 billion and VAT of N198.057 billion.

FAAC also disbursed N1.051 trillion to the 774 local governments; N43.284 billion to FGN Derivation and Ecology; N21.642 billion to Stabilisation Account; and N72.717 billion for the development of natural resources.

The Federal Inland Revenue Service and the Nigeria Customs Service were paid N32.854 billion and N19.688 billion, respectively, being cost of collections.

State-by-state analysis of the revenue distributed from the Federation Account showed that Rivers State received the highest allocation of N251.377 billion; closely followed by Akwa Ibom, Bayelsa and Delta states which were paid N167.216 billion, N116.447 billion and N115.799 billion, respectively.

Others include: Lagos State (N77.791 billion); Ondo (N67.123 billion); Kano (N57.975 billion); FCT (N47.167 billion); Kaduna (N45.743 billion); Imo (N45.587 billion); Cross River (N45.585 billion); and Borno (N42.465 billion).

The increase in revenue into the Federation Account was buoyed by the high crude oil prices in the international market which peaked at $147 per barrel in July 2008, before the oil price recession in the last quarter of the year which was occasioned by the global economic crisis.

The oil-based fiscal rule allows the government to save proceeds from oil revenue above the budget benchmark and invest the proceeds.

“Nigeria’s revenue volatility is directly correlated to its dependence on oil proceeds for the bulk of its fiscal revenues, with over 80 per cent of all federally-collected revenues related to oil.

“It is regrettable that the nation’s over-dependence on oil and its volatility complicates monetary and exchange rate policies. This volatility adversely affected the real growth rate of Nigeria’s Gross Domestic Product by inhibiting investment, productivity and reducing public and private investments.”

Transfer to the Excess Crude, Petroleum Profit Tax and Royalty Accounts

1. January 253.291

2. February 258.528

3. March 176.919

4. April 145.52

5. May 171.13

6. June 280.93

7. July 364.13

8. August 300.19

9. September 214.33

10. October 209.21

11. November 52.73

12. December 49.04

Grand Total 2,475.948

from Vanguard