October 30, 2023/CSL Research
A communique issued by the FAAC at its October 2023 meeting indicated that a total sum of N903.48bn was shared to the Federal Government, States and Local Government Councils. The total sum, which is 18% lower than the previous month’s distributable revenue of 1.1trn comprised; distributable statutory revenue of N423.012bn, distributable Value Added Tax (VAT) revenue of N282.666 billion, Electronic Money Transfer Levy (EMTL) revenue of N10.989bn and Exchange Difference revenue of N 186.813bn.
FAAC allocations principally originate from crude oil sales proceeds to the federal account. Despite the recent stability in the price of crude oil, massive crude oil theft and recurrent shut-ins at various crude oil pipeline installations, triggered by vandalism and lack of maintenance, have led to a severe decline in crude oil production.
The major drivers of the FAAC account are Gross Statutory Revenue (GSR), Value Added Tax (VAT), Exchange Gain (EG), Electronic Money Transfer Levies (EMTL), and augmentation from forex equalization account. The FG received a total of N320.54bn, the State Governments received N287.07bn and the Local Governments received N210.9bn.
A total sum of N84.97bn (13% of mineral revenue) was shared to the relevant States as derivation revenue. Many States rely solely on FAAC allocations to run their states with very minimal Internally Generated Revenue (IGR). Based on data from the National Bureau of Statistics (NBS), states like Lagos Rivers Kaduna and Ebonyi had 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 to grow IGR considering the size of their operating expenses.
Based on data from the National Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s oil production rose to a 20-month of 1.56 million barrels per day (mbpd) in September 2023, from 1.41mbp recorded in August, c.79.4% of its 1.8mbpd OPEC quota in Q3 2023. When compared with the country’s budget benchmark, actual crude oil production in Q3 2023 was c.93.9% of the 1.69mbpd day in the 2023 budget.
We earlier stated that the removal of fuel subsidy will boost FAAC allocations significantly, however, there are indications that the subsidy has been subtly reintroduced and this will continue to put pressure on the country’s finances. Subsidy deductions by the NNPC have previously significantly reduced the amount shared by FAAC.
Kindly click on the below link to download the full report.
CSL Nigeria Daily – 30 October – Government Revenue FAAC.pdf
