NEITI: FAAC disbursed N1.95tn from January to March, reveals ‘wide disparity between states’

The Nigerian Extractive Industries Transparency Initiative (NEITI) says the Federation Accounts Allocation Committee (FAAC) disbursed N1.95 trillion to the federal, state, local governments  and other statutory agencies in the first quarter of 2020.
NEITI disclosed this in its quarterly report released in Abuja, on Monday.
It said the disbursements showed that N791.4 billion went to the federal government, N669 billion was shared by the states and about N395 billion was shared by the 774 local government areas.
It noted that the balance went to the North East Development Commission, the Excess Crude Account, Federal Inland Revenue Service (FIRS), Nigeria Custom Service (NCS) and the Department of Petroleum Resources.
The report also noted that the first quarter 2020 FAAC disbursements were the highest first quarter disbursements since 2014.
“Total disbursements were N1.648 trillion in Q1, 2015, N1.132 trillion in Q2  2016, N1.411 trillion in Q1 of 2017, N1.938 trillion in Q1 2018, and N1.929 trillion in Q1 2019,” it said.
The report also examined FAAC disbursements in the Q1 of this year and made projections on the possible impacts of COVID-19 on government revenues.
“While total disbursements in Q1 2020 were slightly higher than Q1 2019 and Q1 2018, disbursements to the three tiers of government in Q1 2020 were slightly lower than Q1 2019 and Q1 2018.
“This is due to transfers to other accounts in Q1 2020 which were not done in either Q1 2019 or Q1 2018.
“These include allocations to the North East Development Commission and transfer to Excess Crude Account,” the report revealed.
It also explained that total FAAC allocations during the period under review comprised gross disbursements to the federal government, states, local government councils and 13 per cent derivation.
It also covered cost of collections by the Nigerian Customs Service, the Federal Inland Revenue Service, the Department of Petroleum Resources and other allied handling charges.
The report noted that from the previous years, with the exception of 2018, the general trend since 2015 had been that total disbursements fell in the second quarters, before rising in the third quarters.
It also noted that with the COVID-19- pandemic, it was almost certain that total disbursements would fall in the second quarter of 2020.
On FAAC disbursements to states between January and March, it said that there was a wide disparity between states as Osun State with the lowest allocation received N6.44 billion and Delta State with the highest disbursement received N52.03 billion, a difference of 708 per cent.
The report also disclosed that Delta State’s net FAAC disbursements were higher than the combined total net disbursements of N50.67 billion of the six lowest receiving states.
It named the states to include Osun, Cross River, Plateau, Ogun, Ekiti and Gombe.
“Further analysis revealed that combined disbursements to four states of Delta, Akwa Ibom, Rivers and Bayelsa with the highest net FAAC disbursements were higher than the combined net disbursements for the 17 states with the lowest disbursements.
“The combined total net disbursement to these four states was N167.76 billion.
“This figure is higher than the combined total of N159.99 billion received by the 17 lowest receiving states.
“The states are Osun, Cross River, Plateau, Ogun, Ekiti, Gombe, Zamfara, Kwara, Nassarawa, Ebonyi, Taraba, Benue, Adamawa, Bauchi, Abia, and Kogi),” the report said.
It added that 31 states received less than N20 billion as total net FAAC disbursements in the first quarter of this year while only five states received more than N20 billion.
The states, it said, are Lagos (N26.23 billion), Bayelsa (N35.14 billion), Rivers (N39.99 billion), Akwa Ibom (N40.61 billion), and Delta (N52.03 billion) respectively.
Furthermore, the report disclosed a wide disparity in the amounts deducted from the states as their debt obligations.
“For instance, Lagos State had the highest deductions of N14.92 billion, while Yobe State had the lowest deductions of N820.18 million,” it said.
On prospects of FAAC disbursements for the rest of the year as a result of the impact of COVID-19, it said, “In light of the ‘double whammy’ of declining oil demand and oil prices as a result of the COVID-19 pandemic, government revenue would likely continue to fall in subsequent months.
“As global crude oil prices plummet in the midst of the global oil supply glut arising from lockdown of economic activities in many countries of the world, all tiers of government will struggle to fund their 2020 budgets.”
It added that the projected revenue for the federal government for the year stands at N8.42 trillion, comprising oil revenue of N2.64 trillion, non-oil revenue of N1.81 trillion, and revenue from other sources of N3.97 trillion.
It noted that oil revenue remained the dominant single source of revenue, with the figure of N2.64 trillion making up 31.35 per cent  of total projected revenue.
“The interesting point to note is that while the share of oil revenue represents the direct revenue, there are also indirect sources of revenue from oil.
“These include signature bonus and renewals and share of dividend from NLNG. In addition, taxes and customs duties, which are based on economic activities will suffer in the light of the lockdown of the major activity hubs of the country,” it said.
The NEITI report called for innovative and concerted actions on the part of government at all levels to mitigate the impact of COVID-19, not just on revenues but also on the economy as a whole.
It welcomed the proactive measures already been taken by the federal government in this direction.
According to the report, the measures include the approval to withdraw 150 million dollars from the Stabilisation Fund to supplement  FAAC disbursements.