Leadership (Abuja)
Justus Nduwugwe
16 November 2008
Abuja — The Federal Government has created a separate account for revenues generated from gas different from revenues accruing from sale of oil. This is coming against the backdrop of the distribution of the sum of N436.72bn among the three tiers of government, namely, Federal, States and Local Governments, for the month of October, 2008.
These were made known by the Minister of State for Finance, Remi Babalola, who, as usual, chaired monthly meeting of the Federation Accounts Allocation Committee (FAAC), held in Abuja .
According to the Minister, the creation of the account followed the ruling of the Supreme Court and in consideration of the decision of FAAC that the Office of the Accountant-General of the Federation and the NNPC open a Gas Revenue account separate from the Oil Revenue Account.
Furthermore, the Minister challenged states and local governments to compete and open up their activities for credit rating by the international rating agencies, stressing that Vision 2020-20 can only be achieved if the states play their roles as critical transformation planks.
In his words, "we expect each state to compete on the Doing Business Variables so that we can galvanise Nigeria amongst the best business environment".
He also said that oil production is being constrained by under-investment, stating that the country's actual production is down to 2mbpd as against a productivity of 3mbpd and a quota of 2.25mbpd.
Babalola also indicated that as a result of the dwindling revenue from the Joint Venture contracts occasioned by this drastic drop in oil production levels, there is a compelling need for us to refocus on alternative revenue sources as statutory allocation alone cannot and will not fuel our economic growth but humongous private investment will.
He also expressed worry that the crash of crude oil prices and production decline challenges will put pressure on FAAC projections as well as the prognosis for government programmes in 2009, seeking for an urgent paradigm shift.
In his words, "At the Federal level, we have repeatedly cautioned that as oil resource is a depleting asset, the revenue derived should be transformed into assets that will generate sustainable income. It is this income that may be consumed not the inflows from the oil revenue.
"Based on the foregoing, it is my desire to place before this committee for discussion the need to set up a sub-committee on Joint Venture funding with specific terms of reference to advise on how we can use some of the excess over buffer in the excess crude account for investment purposes without contravening the law."
With regard to the $53 billion power sector intervention fund, the minister disclosed that five states are yet to officially notify the Ministry of Finance about the response of their State Houses Assembly.
A communiqué issued by the Accountant General of the Federation, Hassan Dankwambo, at the end of the FAAC meeting indicated that there was an increase of N3.92bn over the N432.80bn shared last month, bringing the amount shared to N436.72bn for October.
The Accountant General said that the increase was attributed to the increase in the Value Added Tax (VAT), stating that the total VAT for the month was N34.03bn as against N29.41bn distributed in the previous month, resulting in an increase of N4.62bn. The sum of N85.69bn was provided from the Domestic Excess Crude Savings Account, as budget augmentation for the month under discussion.
A further analysis of the distribution showed that out of the total amount distributed, Federal Government got N155.01bn, States, N92.48bn, while the 774 LGs were allocated N70.13bn. As usual, 13 per cent or N33.41bn was allocated to the mineral producing states.
It was also indicated that N209.21bn was transferred to the Excess Crude Petroleum Profit Tax (PPT) and Royalty Account.
Be the first to Write a Comment!
Copyright © 2008 Leadership. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
