Allocation from the Federation Account available for sharing this month by the tiers of government reduced by N17.38 billion compared to what was shared last month.

The allocation for December last year, distributed last month was N387.77 billion compared to the N370.38 billion distributed yesterday for January.

The decline in the allocation was attributed to the drop in oil prices from $43.4 to $39.04 which resulted in revenue loss amounting to $22.55 million.

Finance Minister Mrs Kemi Adeosun told reporters at the end of the monthly Federation Account Allocation Committee (FAAC) meeting in Abuja last night that the drop in the funds distributed was caused by several reasons including oil production shut- in and shut downs; continued drop in oil price and the diversion of Federation Account revenue to fund the Joint Venture Cash (JVC) call commitment to oil majors in the production of crude minerals.

She confirmed that as a result of the continued oil price slump and inability of government to meet the JVC cash call commitment, government was working a modified carrier strategy to raise funds from the debt market to fund the commitments as it could no longer be guaranteed from oil proceeds.

To reduce the negative impact of cash call obligations on the Federation Account, Mrs Adeosun said the Nigeria National Petroleum Corporation (NNPC) is proposing a Modified Carry Arrangement (MCA) which would be more beneficial to the country because of the continuous decline in oil prices.

Details of the agreement she said, is being worked out and would be presented to the National Economic Council (NEC) for approval. “The Minister of State Petroleum Resources who also doubles as the Group Managing Director of the NNPC has been mandated to explore this strategy after which it would receive NEC’s blessing for activation,” she said.

Giving a breakdown of the allocation to the three tiers of government, the minister said for statutory allocation, the Federal Government received N137.47 billion representing 52.68 per cent after deducting the cost of collection to revenue generating agencies of the Nigeria Customs Service (NCS) and the Federal Inland Revenue Service (FIRS).

Also from the statutory allocation, the states pocketed N69.72 billion or 26.72 per cent, local governments N53.75 billion or 20.8 per cent while N22.38 billion was allocated to the oil producing states as 13 per cent derivation principle.

From Value Added Tax (VAT) revenue, the Federal Government received N10.04 billion or 15 per cent, states N33.46 billion or 50 per cent while local governments received N23.42 billion or 35 per cent.

With regard to revenue, the finance minister said: “Gross statutory revenue of N290.96 billion received for the month of January was lower than the N315.01 billion received in the previous month of December by N24.05 billion.”

Source: Nation