Thursday, 29 October 2015

Nigeria’s oil revenue drops further

Nigeria oil revenue
Nigeria’s earnings from crude oil exports continued ​to decline in September​, as the three tiers of government shared only N389.936 billion for the month.

Apart from May and June, when the country earned revenues ​higher than preceding months, statutory earnings have been on the decline since July.

In July, the country’s revenue dropped by N52.4 billion; N64.36 billion in August; and N47.14 billion in September.

The Permanent Secretary, Federal Ministry of Finance, Anastasia Daniel-Nwaobia, said at the end of the meeting of the Federation Accounts Allocation, FAAC, that gross statutory revenue for September stood at N328.326 billion.

Of th​at figure, Mrs. Daniel-Nwaobia said about N7.2 billion was deducted as cost of collection for the various revenue generating agencies, including the Federal Inland Revenue Service, FIRS, and the Nigeria Customs Service, NCS.

She said grand statutory revenue for the month was N321.996 billion, which was lower by N47.144 billion than the N369.14 billion collected in August.

The decline in revenue for the month was attributed to the negative impact of shut down and shut-in of oil production in various terminals in the Niger Delta for maintenance and repairs.

Specifically, the country lost about $32.07 million during the month as a result of the drop in average crude oil price from $56.76 per barrel in July to about $47.32 in August.

​The ​Organisation of Petroleum Exporting Countries, OPEC, price stood at $42.40 per barrel on Tuesday, October 27, 2015, compared ​to $43.13 recorded the previous day.

The current revenue challenge, Mrs. Daniel-Nwaobia noted, was further worsened with a decline of over N44 billion in non-oil revenue collections.

The value added tax, VAT, for the month was N56.399 billion, while refund to the Federal Government from the Nigerian National petroleum Corporation, NNPC was N6.33 billion and N5.211 billion exchange gain.

The grand total revenue available for distribution among the three tiers of government for the month stood at N389.936 billion as against N442.606 billion in August.

The Permanent Secretary said the balance in the Excess Crude Account, ECA, as at October 28 remained at about $2.256 billion.
“No excess money has been added to the account as the country has not made any excess revenue from the sale of her crude oil,” she explained.
Details of the revenue distribution showed that the Federal Government collected N151.343 billion (about 52.68 percent); state governments N76.763 billion (about 26.72 percent); Local Governments N59.181 billion (about 20.6 percent) and N27.505 billion as 13 percent derivation to oil producing states.

On the dwindling oil prices, Mrs. Daniel-Nwaobia said the Federal Government was seriously worried about the impact on the economy and the ability to carry out development programmes.
“The committee is very worried. Almost all economies of the world are facing difficulties in the form of headwinds,” she said.
“It’s how one manages ones’ situation that matters. The Federal Government is already aware of this challenge the country is facing. Reforms are already being undertaken. The impact of the reforms may not come as quick as one would expect, but with time, they would manifest,” the Permanent Secretary said.
With the country’s dependence on more than 70 percent of her revenue on oil, she said the volatility in the price of crude oil has exacerbated the country’s poor revenue base.

​The government, she pointed out, was talking about diversifying the economy away from oil, with its focus now shifting to other sectors of the economy, especially the non-oil sector.

The concentration of government effort, the Permanent Secretary pointed out, was now on domestic resource mobilisation in the area of improvement on the country’s tax administration to widen the tax net to cover the formal sector, to generate more revenue.

Nigeria’s population is very large. There are a lot of small economic activities around that have not been properly captured in the tax net.

Discussions, she stated, are on to review of the VAT rate, adding that a lot of sensitization were ongoing.
“We are beginning to see some improvements in revenues coming in from those sectors. Government is also looking at the mining sector. A lot of discussions are on-going to check illegal mining activities. The Ministry is working with the Ministry of Mines and Steel to improve on the revenue from that sector,” said.
On capital allocations in the budget, Mrs. Daniel-Nwaobia said​ the​ government has so far released approved appropriation for two quarters.

Although she could not confirm whether the releases included about N100 billion demanded by the National Assembly for the controversial constituency projects, the Permanent Secretary said most of the ministries, departments and agencies, MDAs, have received their capital votes.

She said those that may not have collected their allocations may be as a result of the requirements under the new Treasury Single Account, TSA policy demands an authority to incur expense, AIE, from the office of Accountant General of the Federation, OAGF before accessing such funds.


Credit: Bassey Udo/Premium Times

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