Three tiers of govt shared N8.5 trillion in 2018 as quarterly allocations hit 4 year high

OrderPaperToday – The Federation Allocation Account Committee (FAAC) disbursed a total N8.5 trillion to the three tiers of government in 2018.

Also, 2018 also marked the first time since 2014 that disbursements exceeded N2 trillion in three consecutive quarters.

These revelations are contained in the latest edition of the Nigeria Extractive Industries Transparency Initiative (NEITI) Quarterly Review released today.

According to the report, the total sum of N8.52 trillion shared among the three tiers of government in 2018 represents 32.8% increase compared to N6.418 trillion disbursed in 2017 and 67.1% higher than N5.1 trillion shared in 2016.

Further analysis showed that the Federal Government received N3.483 trillion in 2018 representing 41% while the 36 States received the sum of N2.85 trillion, representing 33.4% and the 774 local governments got N1.667 trillion, representing 19.6%.

On allocation to states, the report revealed that the leading states were Delta (N213.6 billion), Akwa-Ibom (N202.4 billion), Rivers   (N172.6 billion), Bayelsa (N153.1 billion), Lagos (N119 billion), and Kano (N84.2 billion).

Six states namely Jigawa, Katsina, Borno, Ondo, Kaduna, and Edo received between N60 billion and N69.9 billion.

Furthermore, twelve states received between N50 billion and N59.9 billion. They are: Yobe, Enugu, Kogi, Bauchi, Imo, Sokoto, Kebbi, Anambra, Abia, Benue, Niger and Oyo.

The remaining 12 states received less than a total of N50 billion with Osun state recording the lowest receipt of N22.8billion.

“The net disbursement to Delta State was 935% of Osun State’s,” the review noted.

The report explained that despite the increase in FAAC disbursements, the allocations were inadequate to meet states’ budgetary requirements.

“Clearly, there was no state that could adequately finance its budget solely from FAAC disbursements. There were three states where FAAC disbursements were more than 50% of their budgets: Delta, Enugu, Yobe. For all other states, disbursements were less than 50% of their budgets”, the NEITI review observed.

On internally generated revenues (IGR), only four states (Cross River, Lagos, Ogun and Rivers) had an estimated IGR that was more than 50% of their FAAC allocations. Out of these states, only Lagos and Ogun had IGR higher than their FAAC allocations.

The publication added that six states (Enugu, Kaduna, Kano, Kwara, Osun, Oyo) had an IGR that was more than 40% of their FAAC allocations. The report therefore stated that for the ten states above, there is a possibility that actual IGR may be sufficient to address budgetary shortfalls.

On revenue projection in 2019, the quarterly review foresees an upward trend in revenue from the oil and gas sector. NEITI is also optimistic that domestic oil production will increase in 2019 following the take-off of Egina offshore field, which started production in December 2018, with optimum production capacity of 200,000 barrels per day.

“FAAC disbursements will increase further in 2019. This is largely due to expected increase in Nigeria’s oil production and further consolidation of efforts by OPEC to keep oil prices from falling.

“With the concerted efforts by the Organization of Petroleum Exporting Countries to limit oil production, coupled with sanctions on Iran and Venezuela oil exports, it is expected that oil prices will not fall to the very low levels experienced from 2014 to 2017,” the report predicted.

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