The gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three tiers of government and public agencies amounted to N675.9bn in December (from November revenue). This shows an increase of 0.6% or N4bn 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, import and excise duties recorded increases over the previous month. The FGN received a total of N261.4bn, state governments received N210.0bn, including N49.0bn representing the 13% derivation for the few oil producing states and LGCs received N155.5bn.
The headline figure consists of N488.7bn in gross statutory distribution, N182.7bn from the VAT Pool, and N4.2bn of exchange gain and excess bank charges of N438m was recovered. The total deductions for cost of collection was N30.9bn and the total deductions for statutory transfers, refunds and savings was N136.9bn.
The committee disclosed that the balance in the Excess Crude Account (ECA) is USD35.4m. The average monthly FAAC distribution (N682bn in 2021) has declined from an average of NGN710bn in 2018 and N685bn in 2019 but is slightly higher than the N636bn recorded in 2020.
According to the Nigerian National Petroleum Commission (NNPC), since January ’21 a total of N1.2trn has been deducted from its contributions to the federation from its FAAC remittance for subsidy payments under the title “under-recovery of PMS/Value shortfall”. It disclosed that it would deduct its November ’21 shortfall of N270.8bn from its December ‘21 proceeds.
Nigeria’s oil production recovered slightly in November to 1.3mbpd (excluding condensates) compared with 1.2mbpd in October. According to the NNPC, the closure of eight oil terminals between August and October this year led to the loss of c.17.9mb of crude oil. The affected terminals included Forcados, Bonny, Odudu, Brass, Yoho, Urha, Ajapa and Aje. The closures were due to sabotage of oil facilities, community interferences, among others. In addition to the aforementioned, the subsidy payments have also contributed to straining the NNPC’s FAAC contributions in 2021.
A small number of states, led by Lagos, can still meet their spending commitments, including capital items, at these reduced levels of FAAC payout because their internally generated revenue figures are material. For most states that depend solely on the monthly FAAC distribution, the prospects are bleak.