May 22, 2023/CSL Research
A communique issued by the Federation Account Allocation Committee FAAC in its latest meeting on Friday said it shared a sum of N655.932 billion among the three tiers of government in April 2023. The figure compares with N714.629bn shared in March and N722.677bn shared in February 2023. The Federal Government had the biggest draw from the account (56%), the 37 State Governments (24%), the 774 Local Governments (20%) and other relevant agencies in the country. The month-on-month decline is traceable to a significant decrease in petroleum profit tax (PPT), company income tax, import and excise duties, and oil and gas royalties, also a marginal decrease in VAT and EMTL.
The major drivers of the account are made up of five items which are: gross statutory revenue (GSR), Value Added Tax (VAT), exchange gain (EG), electronic money transfer levies (EMTL), and augmentation from forex equalization account. Many States rely solely on FAAC allocations to run their states with very minimal Internally Generated Revenue (IGR). Based on the 2022 Budget report, states like Lagos Rivers Kaduna and Ebonyi have comparatively limited dependence on federally distributed revenue for their operations. In contrast, states like Benue Taraba Adamawa Yobe and Bayelsa either need to work harder on growing their Internally Generated Revenue considering the size of their operating expenses or work on pruning their operating expenses.
Based on data from the National Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s oil production dropped month on month, down 2% to 1.517 million barrels per day (mbpd), in March 2023, from 1.547mbpd recorded in February 2023. The nation’s output had risen by 3.5% in February 2023 to 1.54mbpd from 1.494mbpd recorded in January. Nigeria produced about 70% of its 1.8mbpd OPEC quota in Q1 2023. Despite the March drop, the Q1 performance is a significant improvement in crude oil production from last year when production was at an all-time low. When compared with the country’s budget benchmark, actual crude oil production in Q1 2023 was c.75.6% of the 1.69mbpd day in the 2023 budget.
