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Tag: FAAC

  • FAAC: FG, States, LGAs share N698.71 bn for September

    The Federal Government, 36 States and FCT as well as 774 Local Governments on Thursday shared N698.7billion for the month of September.

    The Minister of Finance, Mrs Zainab Ahmed, said this in Abuja, while briefing newsmen on the outcome of the Federation Account Allocation Committee (FAAC) meeting.

    Giving a breakdown of the revenue accrued in September to be distributed in October, Ahmed said N569.28 billion which was received as gross statutory revenue, was lower than the N587.1 billion shared in August by N17.8 billion.

    A communiqué issued by the Technical Sub-Committee of FAAC showed that the distributable statutory revenue for the month stood at N569.28 billion and the total revenue distributable for the month was N698.7billion.

    It also showed that the gross revenue available from Value Added Tax (VAT), was N75.9 billion as against N109.9 billion distributed in the preceding month, resulting in a decrease of N33.9 billion.

    “We are also distributing N50 billion which has accrued from the forex equalisation account to the three tiers of government.

    “There is an exchange gain also of N0.275 billion that is included in the distribution.

    “So total distributable revenue to the three tiers of government for the month of October 2018 is N698.71 billion,” Ahmed said.
    In the summary of the distribution, the Federal Government got N265.6 billion from statutory revenue, N11.3 billion from VAT, N0.13 billion from the exchange gain and N22.9 billion from forex equalisation fund, culminating in N300.1 billion.

    The States got N134.75 billion from statutory revenue, N37.9 billion from VAT, N0.06 billion from the exchange gain and N11.6 billion from forex equalisation fund, culminating in N184.4 billion.

    The Local Governments got N103.8 billion from statutory revenue, N26.5 billion from VAT, N0.05 billion from the exchange gain and N8.96 billion from forex equalisation fund, culminating in N139.4billion.

    Derivation of 13 per cent of mineral revenue amounted to N59.09 billion and cost of collection/transfer and Federal Inland Revenue Service (FIRS) Refund was put at N15.57 billion.

    “Crude oil export sales increased by 0.17 million barrels resulting in increased revenue to the Federation of 8.48 million dollars.

    “However the average unit price dropped from 77.10 dollars to 75.69 dollars.

    Ahmed said that the report of the committee on the Excess Crude Account (ECA) was stepped down and withdrawn to enable the committee to rework and represent it at the next meeting. (NAN)

  • ‘FAAC disburses N3.946tr in six months’

    The Federation Accounts Allocation Committee (FAAC) has disbursed N3.946 trillion in the first half of 2018 to federal, state and local governments, the Nigeria Extractive Industries Transparency Initiative (NEITI) quarterly report has revealed.

    The report released in Abuja yesterday, noted that the amount rose by 41.4 per cent compared to N2.788 trillion disbursed in the first half of 2017 and 95.4 per cent higher than the N2.019 trillion disbursed in the first half of 2016.

    It said Delta State received the highest allocation of N101.19 billion in the six-month, followed by Akwa Ibom with N100.2 billion; Rivers State with N85.01 billion, while Bayelsa received N77.14 billion.

    According to the report, the four states received N364.26 billion in the quarter under review.

    “Thus, the disbursements in the first half of 2018 were almost double the disbursements in the first half of 2016.

    “The breakdown of the data reveals that in the first half of 2018, the Federal Government received N1.652 trillion, which made up 41.8 per cent of the total amount disbursed.

    Read also: FAAC disbursed N6.418tr in 2017

    “The states got N1.375 trillion, representing 34.8 per cent of the total; while N795 billion was disbursed to the local government areas (LGAs), representing 20.1 per cent of the total,” it said

    The report further noted that following the top four states to make the top 10 category in the report was Lagos State that received N59.52 billion, Kano N39.88 billion, Edo N32.88 billion, Kaduna N32.86, Ondo N30.96 billion and Borno N30.04 billion.

    On the other hand, the report revealed that the 10 states with the least federation allocation received a total of N189.45 billion, about six per cent less than the N201.39 billion total allocation received by Delta and Akwa Ibom states.

    Osun State received the least allocation in the six-month period with N10.24 billion, while Cross River, Ekiti, Zamfara and Ogun states received N17.13 billion, N17.92 billion, N18.64 billion and N18.79 billion.

    Others include Plateau, Gombe, Kwara, Ebonyi and Taraba, with allocation of N20.6 billion, N20.64 billion, N21.39 billion, N21.61 billion and N22.49 billion.

    Continuing, the report noted: “In the first quarter of 2013, total disbursements were N2.607 trillion. This figure for first quarter of 2013 was the highest over this period, while the N886.4 billion disbursed in second quarter 2016 was the lowest.

    “This indicates a difference of N1.721 trillion between disbursements in the highest and lowest months.

    “This figure is very large and further highlights the volatility in revenue for the federation, arising from the dependence on oil.

  • ‘FAAC disburses N3.946trn in 6 months’

    The Federation Accounts Allocation Committee (FAAC) has disbursed N3.946 trillion in the first half of 2018 to Federal, State and Local Governments, the Nigeria Extractive Industries Transparency Initiative (NEITI) quarterly report has revealed.

    The report released in Abuja, on Monday, noted that amount rose by 41.4 per cent compared to N2.788 trillion disbursed in the first half of 2017 and 95.4 per cent higher than the N2.019 trillion disbursed in the first half of 2016.

    It said Delta state received the highest allocation of N101.19 billion in the six-month followed by Akwa Ibom with N100.2 billion; Rivers State with N85.01 billion, while Bayelsa received N77.14 billion.

    According to the report, the four states received a total of N364.26 billion in the quarter under review.

    “Thus, the disbursements in the first half of 2018 were almost double the disbursements in the first half of 2016.

    “The breakdown of the data reveals that in the first half of 2018, the Federal Government received N1.652 trillion, which made up 41.8 per cent of the total amount disbursed;

    “The states got N1.375 trillion, representing 34.8 per cent of the total; while N795 billion was disbursed to the Local Government Areas (LGAs), representing 20.1 per cent of the total.” it said

    The report further noted that following the top four states to make the top ten category in the report was Lagos state that received N59.52 billion, Kano N39.88 billion, Edo N32.88 billion, Kaduna N32.86, Ondo N30.96 billion and Borno N30.04 billion.

    On the other hand, the report revealed that the 10 states with the least federation allocation received a total of N189.45 billion, about six per cent less than the N201.39 billion total allocation received by Delta and Akwa Ibom states.

    Osun state received the least allocation in the six-month period with N10.24 billion, while Cross River, Ekiti, Zamfara and Ogun states received N17.13 billion, N17.92 billion, N18.64 billion, N18.79 billion respectively.

    Others include Plateau, Gombe, Kwara, Ebonyi and Taraba, with allocation of N20.6 billion, N20.64 billion, N21.39 billion, N21.61 billion and N22.49 billion respectively.

    Continuing, the report noted, “In the first quarter of 2013, total disbursements were N2.607 trillion. This figure for first quarter of 2013 was the highest over this period while the N886.4 billion disbursed in second quarter 2016 was the lowest.

    “This indicates a difference of N1.721 trillion between disbursements in the highest and lowest months.

    This figure is very large and further highlights the volatility in revenue for the Federation, arising from the dependence on oil.

    “This shows a generally declining pattern in disbursements from first quarter of 2013 until a trough was reached in second quarter 2016. Thereafter, an upward pattern is observed, and this increase continued until second quarter of 2018,’’ it stated.

    The report indicated that the N2.008 trillion disbursed in second quarter of 2018 was the highest since third quarter of 2014, adding that second quarter of 2018 was the first time an amount in excess of N2 trillion was disbursed since third quarter 2014.

    “This is a run of 14 consecutive quarters of disbursements below N2 trillion.’’ It added.

    It further stated  that all disbursements from first quarter of 2013 to second quarter 2014 were in excess of N2 trillion; this figure, it added  clearly showed  the contraction in revenue for all tiers of government, a pointer to why they had struggled to meet their obligations.

  • FAAC: Buhari orders review of revenue template

    … FG, States, share N821.9bn in June

    President Muhammadu  Buhari has ordered for the review of the revenue reporting template between the NNPC and the Federation Account Allocation Committee (FAAC).

    The Minister of Finance,  Mrs Kemi Adeosun conveyed the President’s directive on Friday while giving a breakdown on how N821.9 billion revenue  generated  in June was shared among the three tiers of government.

    “As you are aware,  in the last couple of FAAC meetings, the accounts presented by NNPC were not acceptable by the states and so Mr President asked to be briefed on the issue.

    “Based on that briefing, Mr President asked for further information to be provided by both the Ministry of Finance and the NNPC.

    “Last Thursday, he held a meeting with myself, the Chief of Staff, the Minister of State for Petroleum and the NNPC team.

    “Mr President gave some certain directives, one which relates to FAAC, is the need to revise the template.

    “It was ascertained that the reporting template between the NNPC and FAAC was not providing the right level of assurance around the figures.

    “It is for this reason that he has directed that a new template be generated jointly between the Ministry of Finance, the office of the Accountant-General, NNPC and RMAFC,” she said

    Adeosun said Buhari also directed that henceforth,  before FAAC meetings, a team from the  Ministry of Finance and the NNPC should go through the figures and agree before presenting it to FAAC members.

    Giving a breakdown of the allocation for the month of June, Adeosun said that  after deductions for cost of collections, the Federal Government received N283.54 billion.

    Adeosun said in accordance with the revenue sharing formula, the 36 states governments received N143.81 billion, while the Local Government Councils received an allocation of N110.87 billion.

    In addition, she announced that N37.4 billion representing 13 per cent of the mineral revenue generated in the month of June, was also shared among the oil producing states.

    To this end, Adeosun said the nation generated N393.17 billion as mineral revenue and N294.17 billion as non-mineral revenue in February.

    She said that in the spirit of saving for a rainy day, N100 billion was transfered to the Excess Crude Account,  making the balance 2.27 billion dollars.

    Meanwhile, the Chairman, Commissioners of Finance Forum, Mr Mahmoud Yunusa, said the state governments agreed with the decision of President Buhari to review the revenue reporting template of the NNPC.

    He said that the Committee will closely monitor the development,  to ensure that it achieves the desired effect.

    Earlier, the Institute of Chartered Accountants of Nigeria (ICAN) introduced the Accountability Index to the representatives of Federal,  States and Local Government authorities.

    The ICAN President,  Mr Razaq Jaiyeola told FAAC members that the Accountability Index was an initiative of the Institute to ensure prudent management of public funds by the three  tiers of government.
    He said that the index will focus on policy based fiscal forecasting and budget, scrutiny and audit, budget credibility and management of assets and debts.
    In summary, Jaiyeola said that the initiative will improve quality of governance in the country and tackle corruption in the public sector. (NAN)

  • FAAC and delayed salaries

    •It is urgent for President Buhari to bring the stalemate to an end

    The deadlock between the Federation Accounts and Allocation Committee (FAAC) and Nigerian National Petroleum Corporation (NNPC) over deposits by NNPC into the federation account has brought delayed or non-payment of salaries back to 14 states. Since 2017, the two agencies have been having disagreements over NNPC’s payments to states from the Federation Account. The most recent is the claim by NNPC that the agreed payment due to states in June is N112billion while the states insist that there is a shortfall of at least N40billion due to them, if all petroleum-related revenue for May had been dropped in the Federation Account, as required by law. And governors have insisted that they would rather wait for NNPC to follow the law, even if this insistence is at the risk of not paying workers’ June salaries.

    There are two issues that require response from the government. One is immediate and concerns the Federal Government; and the other is long-term and concerns federal and state governments. With respect to the face-off between states and NNPC, we are happy that President Muhammadu Buhari has now agreed to intervene. But the president’s intervention should come with the speed that is required to ensure that public servants and their families do not suffer more than they have already done on account of non-payment of salaries.

    Solution to the face-off should not have gone to the apex of government if the laws and regulations guiding collection and deposit of revenue in the Federation Account had been adequately enforced. It is puzzling that NNPC had the audacity to announce that its agreement with the states for June payment from the Federation Account is N112billion. Since when has it become the function of NNPC or any other federal agency to negotiate what accrues to states in the Federation Account?  The face-off has dragged for too long over what ought to have been a simple and straightforward matter: how much funds came to NNPC for transfer to the Federation Account and how much of it does the law say should be passed to the states? Innocent citizens are suffering unnecessarily because of non-payment of what should have been due to states; it is urgent that the president brings the current stalemate to an end.

    On the long-term side, states need to do the needful: work on how to generate revenue to pay their workers—with or without allocation from Abuja. Ideally, in properly structured federations, funds from crude oil should have been used for specific projects, not for paying civil servants. Over-reliance on revenue from crude for decades should not continue to deaden the spirit of creative governance on the part of governors. At present, most states are subordinates rather than coordinates to the central government. Most states seem complacent with the country’s anomalous federalism in which many governors call for true federalism and at the same time rely on funds from crude oil to pay civil servants.

    States need to be creative in how to grow internally generated revenue (IGR) and where they find structural obstacles to such efforts, they ought to be outspoken about removing such obstacles. Furthermore, states ought to be more mindful that there are many countries—unitary and federal—that are doing well economically without having crude oil. Nigeria used to be one of such countries, long before crude oil became the sole determinant of the character of the polity and the economy.

    It is important that states take advantage of the Federal Government’s adoption of economic diversification in response to uncertainty of revenue from crude oil, which for decades has served as the country’s main source of revenue. A rational way to do this is for states to create structures, policies, and programmes that generate additional revenue that can make them act like partners rather than vassals in a federation. In the same vein, states ought to be worried about insecurity, as many investors would be wary to bring their investments to an insecure country. Depending on monthly allocations from the Federation Account is a sure way to keep states underdeveloped and subservient. Generally, self-reliance of federating units is an abiding element of federalism.

  • Governors meet to discuss FAAC deadlock, minimum wage

    The Nigeria Governors’ Forum (NGF) on Wednesday night met in Abuja to discuss matter arising from the Federation Account Allocation Committee (FAAC) deadlock, minimum wage, among other issues.

    The News Agency of Nigeria (NAN) recalls that the June monthly meeting of FAAC in Abuja ended in a deadlock.

    The FAAC monthly meeting is the forum where money is shared among the federal, states and local governments.

    Also on the meeting agenda was presentation by the Cheif Executive Officer of EduMarshals, on replicating EduMarshals education project at the state level.

    The Postmaster General was also expected to make presentation at the meeting on the Nigerian Poster Service in Maximising revenue potential through electronic stamp solution , digital addressing system and addressing verification system.

    The governors were also expected to be briefed by World Bank Country Director, Dr Rachid Benmessaoud, on ”the States Fiscal Transparency and Accountability Sustainability (FSTAS) (NAN)

  • Why governors rejected NNPC’s remittance to FAAC

    Governors rejected the remittance of the Nigerian National Petroleum Corporation (NNPC) to the Federation Account Allocation Committee (FAAC) meeting for last month because it was low, it was learnt.

    For the third time, the meeting on Thursday ended in a deadlock with  commissioners for Finance  failing to share the monthly allocation.

    But a source at the weekend told The Nation in Abuja that because the governors used the estimate of expected monthly revenue from the Federation Account to pass their yearly budgets, any shortfall could cause a dislocation.

    It was also learnt that some of the  governors used the estimate to secure loans from banks which they must service and repay.

    But accepting the shortfall in the revenue meant a distortion of their plans, it was learnt.

    The source said: “Both NNPC and  governors have their issues.The governors are used to getting a particular cash every month. They have budgeted for that and some of them have borrowed waiting for it. So, they can’t take anything  less. This is why they are asking NNPC to bring more money.”

    The source said the governors had instructed their commissioners for Finance not to accept anything less.

    ‘’For April, the FAAC meeting shared N626 billion among the three tiers of government. The meeting in May shared N701 billion. It cannot accept anything less from the same Federation Account when the country is not in a state of emergency,’’ the source added.

    Oil and gas is the economic mainstay of Nigeria. But NNPC that generates the revenue from the sector for the nation has said it has to meet up with its cash call obligation to the Joint Ventures (JV).

    It justified the shortfall, stressing that it had an agreement with the governors that FAAC be given N112billion monthly. The agreed amount was said to be subject to availability of funds from the sale of domestic crude oil allocation for the corresponding month after meeting cash call obligations on JVs, deductions of petrol cost under recovery and pipeline surveillance.

    In statement on June 28, NNPC said the corporation regretted the governors’ additional request of N40billion, saying it was unfortunate, given that NNPC is set to exit the cash call phenomenon.

  • FIRS to explain N90bn drop in collection to FAAC

    The Federation Account Allocation Committee ( FAAC ) has resolved to go after all revenue generating agencies to see that they remit true and accurate accruals into the federation account.

    Next to be targeted, after the Nigeria National Petroleum Corporation (NNPC) underemittances has been addressed is the Federal Inland Revenue Service (FIRS).

    Addressing journalists over weekend on the resolve of the FAAC to go after revenue generating agencies, Chairman Finance Commissioners Forum Mr. Mahmood Yunusa disclosed that they will go after FIRS to explain why there was a drop in what they were suppised to remit to the federation account in May and June 2018.

    According to Yunusa, on FIRS, “if you look at the FAAC report, there was a sharp drop in FIRS’s May and June collections but there was no opportunity for us to actually engage the FIRS for them to explain to us why there was a sharp drop. I can’t remember vividly but the drop was about N90 billion.”

    “So FIRS also needs to tell us why the sharp drop. If they think they are not being sweated too, we will sweat them up because you cannot adopt a kind of arm-chair work – you just sit in your office what comes you take it and what doesn’t get to you, you don’t care to pursue it, no!”

    He noted that “at the state level, we are very willing to cooperate with the FIRS when it comes to VAT (Value Added Tax) remittance because we know as states, we even benefit more than the federal government when it comes to VAT. We are willing to work with FIRS to increase the generation of all the taxes that can be increased for the benefit of the entire country.”

    Yunusa warned that “It is not just NNPC, if Customs is not doing well we will engage them. We have been asking this questions, we have been engaging them. Every revenue generating agency has a target, and we will apply the necessary rules to ensure that we take value for why every revenue generating agency was established.”

    Yunusa reiterated that strengthening the revenue collection and remittance of same to the federation account was an issue FAAC had resolved to see to a logical conclusion.

    According to him, “part of the process of strengthening the system will be to take the collection and remittance of royalty from NNPC to the Department of Petroleum Resources (DPR) while the collection and remittance of PPT will also be returned to the FIRS in line with the law.

    Yunusa insisted that “this is part of the process that we are trying to strengthen and we are trying to adopt. It is there, it is part of the law under oil and gas, like in any other IOC, that all royalties should be collected and remitted to the federation account by the DPR, it is DPR’s responsibility. Before DPR collect that royalty, it has to make sure that the actual amount that is supposed to be remitted is remitted.”

    “If it is under remitted, the DPR will be responsible for the shortfall and I know DPR would not want to be responsible for a shortage that they are not even aware of. If you are supposed to remit X billion of naira, and you remit B billion of naira to them, they won’t accept because it is under remitted. The royalty is calculated and paid based on the oil lifted” he said.

    He added that “the same thing with PPT, the NNPC has to remit the same amount that has to be remitted to FIRS, if not the FIRS will not accept because they would not want to be responsible for the shortfall or under remittance that ordinarily they shouldn’t be responsible for. So that will balance the revenue collecting system. There should be a kind of check and balance. Had it been we had this, this issue wouldn’t have cropped up. That is the system we are trying to strengthen and adopt.”

    On the ongoing face-off between FAAC and NNPC, and the oil Corporation’s claim that exiting the Joint Venture Cash Calls agreement was responsible for the drop in remittance to the federation account, Yunusa said ” the Commissioners of finance forum has very experienced people, professional accountant some of whom have worked in the NNPC. We had a workshop on the JVC programme. Whatever it is, if you want to exit the JVC there is a model or a machinery that is in place, even if you dont understanding, come and tell us. What is JVC -it is a joint Cash Call – it is for me to bring x amount of money while the other partner also brings x amount of money to do a business. So I need to know what I am contributing and I equally need to know what the other party is contributing.”

    Goung forward, he queried NNPC that ” if I am contributing to a JV, I am investing and for every investment there should be return on investment. If there is no return on investment why should you invest? Why should government company invest? It is because it is not your personal company. Government company is your company and it should even invest more than you because your personal company could be restricted just for you and your immediate family. But government company, if it is well sustained, well maintained, well invested and well managed, it could serve even people that are yet unborn and it will keep on driving development in the country.”

    On the issue of hiring forensic auditors and consultants to work with the NNPC as suggested by the Federation Account Allocation Committee in March, the Chairman of the Forum said, “we are on course, but we want to take these problems one after the other. NNPC is not the only revenue generating agency in the country but NNPC is having this much attention because it is the major driver of revenue, all the tiers of government rely to some extent, on the revenue that is driven from the centre and the major contributor of that revenue from the Centre is NNPC and we can’t afford not to fix whatever problem we see or we presume is there in NNPC, we are risking the entire economy. Be that as it may, we are still sticking to our decision, by the time we solve this problem, we will look at other issues within the NNPC and other parastatals under ministries of finance and petroleum.”

    The engagement of the consultant he assured “is on course, we will sort all these issues out. NNPC as I have said, is the major contributor of revenue but that does not mean we should take our eyes off other revenue generating agencies like the Customs, FIRS, DPR and the non-mineral sector. We want to take these issues one after the other with a view to solving them entirely.”

    Speaking on why FAAC was cancelled three times in a series, Yunusa said, “we thought we had concluded our reconciliation where whatever that we have put forward to government based on our projections, is supposed to have been solved so that we can have FAAC, and then we move on. But due to some other issues, the government was not able to get the desired attention it supposed to have gotten in respect to the process we said should be followed.”

    However, from the reaching FAAC members, Yunusa said “the top management of the NNPC are out of the country for a meeting, by the time they return, all these things will be put to order. It’s just fair that if such decision should be taken, it should be in a joint session that will involve the Governor’s Forum, the Ministry of Finance, the NNPC as well as the Forum of Finance Commissioners. We are on course towards solving all the problems and we are focused.”

  • FAAC suspends meeting indefinitely

    The monthly Federation Account Allocation Committee (FAAC)  meeting has been suspended indefinitely.

    Yesterday’s scheduled  meeting was the briefest, lasting less than an hour.

    Addressing reporters, Chairman of Commissioners Forum, Mr. Mahmood Yunusa said the meeting can only be reconvene after “the process is strengthened.”

    According to him, “the next meeting is a function of when we finish. What we are looking for is for the process to be strengthened, once the process is strengthened, there is no need for this fight.”

    He noted that the decision of the state governments and other members of FAAC to oppose Nigeria National Petroleum Corporation (NNPC) NNPC’s paltry remittances “is about the system and the process and we are working on it.”

    He said “it is no longer a joking matter, it has gone to the highest level. Mr President will sit down, he is highly interested in this, he is taking his time to ensure that the right thing is done.”

    The state governments determination is hinged on the desire to “strengthen and deepen this process, once the process is strengthened, the correct amount is supposed to go to federal revenue account.”

    If the process of remitting proceeds to the Federation Account is strengthened, Yunusa assured that “even if it is small we can not challenge NNPC, so we are also helping NNPC from undue pressure.”

    He noted that state governments and other FAAC members opposed to NNPC “know that people are facing difficulties but this is a sacrifice that all of us must do to get out of this problems of NNPC under-remittance. If the process is operated the way it is supposed to, no body will complain.”

    This is the third time the May accruals in the Federation Account for disbursement in June 2018 has been postponed. This has crippled states and federal authorities from paying civil servants June salaries.