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Hope Rises for New Revenue Formula as Buhari Inaugurates RMAFC Board

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  • Hope Rises for New Revenue Formula as Buhari Inaugurates RMAFC Board

The quest of the 36 state governments for a new revenue formula may soon become a reality as President Muhammadu Buhari is set to inaugurate the board of the Revenue Mobilisation, Allocation and Fiscal Commission, on Thursday (today).

The RMAFC is the body responsible for preparing the formula for sharing revenues among the three tiers of government in the country.

The body is also responsible for fixing the remuneration of political office holders as well as monitoring the revenues accruing to the federation account from revenue-generating agencies.

Our correspondent learnt that 30 new members of the commission would be inaugurated at the State House, Abuja. The commission is made up of 37 members with each state of the federation and the Federal Capital Territory represented by one commissioner.

The inauguration will end more than three years of the revenue body without substantive leadership. It will also end the inability of the body to make policy decisions for lack of quorum given that the commission had progressively diminished in the number of commissioners.

Although Buhari had in July 2016 announced the reappointment of Mr Elias Mbam as the Chairman of the commission, his name was not sent to the National Assembly until recently when it became necessary to fill the depleted body.

Mbam left the commission in November 2015 after the end of his first five-year tenure.

Some of the major tasks facing the commission as it is inaugurated include giving the nation a new revenue formula which constitutionally is supposed to be reviewed every five years.

The commission may also feel the pressure to review the remunerations of political office holders in the country which many Nigerians think are outsized and do not reflect the reality in an economy that has been facing declining revenues.

Although the commission had completed work on both new revenue formula and remuneration package for political office holders, the processes were not concluded because the documents were not presented to the National Assembly by the President.

It is not clear whether the commission would press for completion of the processes or opt for fresh reviews. However, opting for fresh reviews may be more logical given the passage of three years since the works were completed as well as the preponderance of new membership of the commission.

State governors had recently hinged the payment of N30, 000 minimum wage on the review of the revenue formula in a way that would give the states more substantial resources.

Revenue sharing formula which has remained a controversial subject in Nigeria even before independence in 1960 refers to the proportion of resources accruing to the federation that goes to each component of the federation.

It also defines the proportion of resources that must be retained in the territories where they are generated as well as what goes to the agencies of government that collect the revenues on behalf of the federation.

Currently, 13 per cent of mineral resources known as derivation go to oil and solid minerals producing states. Four per cent of the money collected by Nigeria Customs Services is given to the organisation as the cost of collection.

Similarly, the Federal Inland Revenue Services receives seven per cent of the money it collected to cater for the cost of collection.

After these deductions, both mineral and non-mineral revenues are pulled together into the federation account and shared among the three tiers of government.

At present, the Federal Government gets 52.68 per cent. The state governments get 26.72 per cent while the Local Government Councils get 20.6 per cent.

From Value Added Tax, four per cent cost of collection is assigned to FIRS.

After these deductions, the net revenue is shared among the three tiers of government in the proportion of the Federal Government, 15 per cent; state governments, 50 per cent, and Local Government Councils, 35 per cent.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

Nigeria’s Exports Under US Duty-free Policy Declines to $300.48m

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Nigeria’s Exports to the United States Under Duty-free Policy Declined by 88 Percent to $300.48 million

Nigeria’s total exports under the US duty-free declined by 88 percent from $2,502.86 million to $300.48 million in the first eight months of 2020.

In the latest African Growth and Opportunity Act (AGOA) policy report established in 2000, crude oil export accounted for 99.8 percent of Nigeria’s AGOA exports to the United States in 2019.

In 2019, oil and gas products worth $3.12 billion were exported to the US under the duty-free policy.

However, the plunged in global demand for Nigerian crude oil due to the COVID-19 lockdown weighed on the nation’s oil exports and revenue generation.

The United States imported 5.53 million barrels of crude oil from Nigeria in the first quarter of 2020, down from 15.07 million barrels imported in the final quarter of 2019.

Speaking on the need to improve non-oil export to take advantage of the duty-free like other African nations Mr Olusegun Awolowo, the Executive Director and Chief Executive Officer, Nigerian Export Promotion Council, who spoke at a virtual event recently said despite efforts to sensitise Nigerian exporters on the need to take advantage of the duty-free trade opportunity, only a few Nigerian exporters are benefiting from it.

He said the record crash in global oil prices is an indication that a mono-product economy like Nigeria is not sustainable and that there is an urgent need to develop non-oil export.

We cannot rely on crude oil export as both our major source of government revenue and foreign exchange generation. We must diversify our export base,” Awolowo said.

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Road Projects: Nigeria Owes Contractors More Than N390 Billion, Says Fashola

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FG Owes Road Contractors N392 Billion for Road Projects

The Minister of Works and Housing, Babatunde Fashola has said the Federal Government owes companies handling the 711 road projects across the country a total sum of N392 billion.

This, he said was higher than the N276 billion allocated for road projects in the proposed 2021 budget.

The minister disclosed this on Wednesday while defending the 2021 budget of his ministry before the Senate Committee on works.

Fashola said, “With the situation on ground, a stop has come for new projects and the country needs to prioritise the existing ones in order to complete some of them.

According to him, a total of N6.62 trillion was needed to fund the 711 road projects but because of the limited available resources, there is a need to prioritise the important ones.

He said, “We do not have the resources that we need to fix our road infrastructure at once; the very reason we need to prioritise what want to do.

“The situation on ground requires us to cut our coat according to our cloth and not according to our size because no good will come out of more new road projects now.

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Waltersmith’s 5,000bpd Modular Refinery in Imo State to Commence Operations

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Dangote refinery

5,000bpd Modular Refinery Built in Imo State to Start Operations

The Department of Petroleum Resources (DPR) has said the 5,000 barrels per day Modular Refinery project built in Imo State is ready for operations.

Sarki Auwalu, the Director, DPR, disclosed this during a pre-commissioning visit to the project site in Ibigwe, Imo State.

In a statement released by Waltersmith, Auwalu was quoted as saying the purpose of his visit was to ensure that the refinery was ready to commence operations.

He said “We can confirm that the refinery is very much ready to commence operations. We have seen all the preparations.

“To us, the plant is alive. The commissioning is just symbolic. Everywhere is ready to start off. My overall assessment is excellent.

“We have been to other modular refineries but we have not seen anything like this – the space, the way it is arranged and the way it will work.”

The 5,000 barrels per day modular refinery is scheduled for inauguration this month. The refinery has crude oil storage capacity of 60,000 barrels and it is expected to deliver more than 271 million litres per year of refined petroleum products.

Auwalu said, “The role we play is to enable businesses and create opportunities. When DPR issues you a licence, it enables you to invest and as a result of that opportunity we create, that business is enabled.

“Waltersmith is one of our success stories. We consider the project as ours. We have been tracking their growth and we are happy to see that our child is growing. It is our plan that they expand and they have the potential.”

Speaking on the project, Abdulrasaq Isah, the Chairman, Waltersmith Refining and Petrochemical Company, said the project is the first phase of a series of refinery projects that will lead to the delivery of up to 50,000 barrels per day in refining products.

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