The gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three tiers of government and public agencies amounted to N671.9bn (USD1.62bn) in November (from October revenue). This shows a decrease of -9.2% or N68bn from the previous payout. Based on data in the local media, we learnt that companies’ income tax (CIT), petroleum profit tax (PPT), value added tax (VAT), oil and gas royalties recorded decreases while excise duty recorded an increase over the previous month.
The FGN received a total of N284.3bn, state governments received N209.8bn, including N21.5bn representing the 13% derivation for the few oil producing states and LGCs received N156.3bn.
The headline figure consists of N363.8bn in gross statutory distribution, N154.8bn from the VAT Pool, and N3.2bn of exchange gain. Based on the communique, N11.5bn was allocated to a combination of collection costs, transfers and unspecified refunds. The committee disclosed that the balance in the Excess Crude Account (ECA) is USD60.8m.
According to the Nigerian National Petroleum Commission (NNPC), it has in recent months made deductions from its contributions to the federation. We note that since June ’21, the corporation deducted a total of N939bn from its FAAC remittance. It disclosed that it would deduct its October ‘21 value shortfall of N199bn from its November ‘21 proceeds.
According to the NNPC group managing director, the subsidy regime would be halted in Q1 ‘22. To ease the impact of the fuel subsidy removal, the FGN plans to disburse N5,000 each to 40 million poor Nigerians monthly. (i.e. N200bn per month).
In 2017 the FGN provided a USD2.1bn Budget Support Facility to state governments to cushion the impact of dwindling resources. We gather that deductions for this loan repayment kickedoff in July ’21. To enable state governments to meet their respective financial obligations, the FGN has now approved N656bn Bridge Financing Facility. We understand that each state is expected to receive N18.2bn with a 30-year tenor, and a 2-year moratorium at an interest rate of 9%.
