Rise in Crude Oil Prices Boosts FAAC Disbursement to N6.418 Trillion
The Federation Account Allocation Committee (FAAC), disbursed a total sum of N6.418Trillion in 2017, representing an increase of 25.8 per cent, and 6.8 per cent when compared to the N5.1Trillion and N6.011Trillion disbursed in 2016, and 2015 respectively.
NEITI attributed this slight increase in FAAC disbursement to the recent rise in crude Oil prices, which peaked as high as $70 per barrels in January. A breakdown of the amount disbursed in 2017 showed that the Federal Government received N2.564Trillion; the 36 States got N1.859Trillion, while the 774 local governments shared N1.502Trillion.
The information is contained in the latest edition of the Quarterly Review of the Nigeria Extractive Industries Transparency Initiative (NEITI), entitled: “Analysis of FAAC Disbursements in 2017 and Projections for 2018.”However, the review noted that despite the increases in FAAC disbursements in 2017, they were still 34.1 per cent and 25.3 per cent lower than the N9.742Trillion and N8.595Trillion in 2013, and 2014, respectively due to the uncertainty in Oil prices.
According to NEITI, declining oil revenue led to a situation where FAAC disbursements to states were a mere fraction of their budgets and range from 7.6 per cent (Osun), to 57 per cent (Yobe).It noted that states received additional N760Billion from the Paris Club loan refunds, which were expected to help alleviate the difficulty in budget execution from dwindling disbursements.
NEITI specifically attributed the slight revenue increase in 2017, to rising oil prices, improved oil production, and greater attention towards the development of the non-oil revenue sectors. It projected brighter prospects in 2018, as a result of the rise in oil prices, and upsurge in Oil production.
State-by-state breakdown of the FAAC allocations in 2017, showed Akwa Ibom State received the highest share of N143.6Billion, followed by Rivers State with N119.6Billion. Delta State came third with N111.2Billion, while Bayelsa State got N105.3Billion.On the other hand, Osun State received N10.4Billion to occupy the lowest position during the year under review.
The NEITI review also revealed a steady rise in revenue disbursements from Value Added Tax (VAT) since 2015. The increase is an indication of a positive signal in the recognition of the government’s policy towards the development of the non-oil sectors through sustained revenue generation from services.
The publication remarked: “VAT disbursements in 2017 were N967.7Billion and N811Billion in 2016. This represented an increase of 19.3 per cent in 2017 over the figures for 2016. Also, total VAT disbursements in 2015 were N778.7Billion.
This represented an increase of N188.9Billion (24.3 per cent) over the 2015 figures.” From the review, the 36 states received the highest share of VAT revenues of N464.5Billion in 2017, followed by N325.1Billion shared among the 774 local Governments, while the Federal Government received the lowest share from VAT proceeds with N139.3Billion. This is on the account of the fact that states take 50 per cent of VAT, while LGAs and the Federal Government take 35 per cent and 15 per cent respectively.
The transparency watchdog linked the improved FAAC disbursements and Nigeria’s exit from recession in 2017 to increased revenues from the Oil and Gas sector as a result of rising Oil prices and improved Crude Oil production due to stability in the Niger Delta.
On Paris Club loan refunds, the review disclosed that the 36 states received N760.18Billion. The refunds were released in two batches of N516.38Billion and N243.79Billion respectively.
A breakdown showed that Rivers State got the highest amount of N44.925Billion, while Gombe State received the lowest sum of N13.4Billion.NEITI’s Director, Communications and Advocacy, Dr. Orji Ogbonnaya Orji, said the quarterly review is designed to provide timely information and data on FAAC disbursements to the three tiers of Government.
According to him, the publication is a tool to support citizens’ advocacy, promote constructive debate, information and enlightenment in tracking the utilisation of the funds for purposes of development. He explained that NEITI’s interest in FAAC disbursements and the statutory recipients is because over 80 per cent of the funds are derived from the extractive industry.