According to data from the Nigeria Extractive Industries Transparency Initiative (NEITI), the federation account of the country was allocated N14.38 trillion in 2020–2021.
This statement was made yesterday during the launch of the 2020–2021 NEITI Fiscal Allocation and Statutory Disbursement (FASD) Industry Report by NEITI Executive Secretary Dr. Orji Ogbonnaya Orji.
The Nigerian National Petroleum Company Limited (NNPCL) sent a total of N1.55 trillion, or 10% of the total transferred to the federal account during the period under review, according to a breakdown of revenue remittance to the federation account.
The report also revealed that N2.7 billion, or 18.83 percent of the total revenue remitted to FAAC during the period, was remitted by the now-defunct Department of Petroleum Resources (DPR), which was unbundled into the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
Furthermore, N2.13 trillion was remitted by the Federal Inland Revenue Service (FIRS); N13.3 billion was remitted by solid minerals; N4.8 trillion was remitted by non-minerals; N3.17 trillion was remitted by VAT; and N2.6 trillion, N2.02 trillion, and N85.2 billion were remitted by CIT, NCS, and other taxes, in that order.
The Niger Delta Development Commission (NDDC) spent N2.41 trillion on projects throughout the assessment period, all of which were classified as emergencies. This prompted major questions about accountability, transparency, excessive prices, and the planning and execution processes of projects.
According to the report, capital projects accounted for 96.71% of the expenditure, with recurrent expenses coming in at 2.9%. Roads (N5.15 billion) and power (N1.42 billion) are completed projects; ongoing projects include buildings (N5.27 billion) and roads (N5.27 billion).
NEITI advised urgent audits on NDDC projects due to their classification as emergencies, citing a failure to conform to established project execution criteria.
As one of the beneficiaries, NDDC got N355.27 billion in direct disbursements from FAAC as required by law. According to the report, this amount was obtained by directly deducting 15% of the total monthly statutory allocations owed by member states, remitting 50% of all money owed by member states from the ecological fund, and setting aside 3% of the oil companies’ annual budget for long-term solutions to the socioeconomic problems facing the Niger Delta region.
The study also revealed that the Federal Government contributed N39.82 billion and N69.68 billion to the NDDC in 2020 and 2021, respectively, for a total of N109.45 billion. This amounts to 30.79 percent of the N355.52 billion it was allotted for the period under review.
According to NEITI’s analysis, the majority of the 36 states substantially rely only on FAAC allocations, which puts their financial stability in danger. It claimed that this pattern causes divergence from the desired agenda and impedes progress in citizen-oriented programs, debt reduction, and economic diversification.
As a result, NEITI recommended that states examine their internally generated revenue (IGR) improvement plans.
The Ministry of Mines and Steel Development’s (MMSD) revenue doubled between 2017 and 2021, according to the report, demonstrating a notable improvement in tax collection. It did note, though, that this was still little in comparison to the sector’s potential revenue from mineral reserves.
The report highlighted, “It states that revenues from solid minerals remain abysmally low compared to the sector’s revenue potentials.”
In order to reduce risks and encourage investment, NEITI recommended that the Federal Government investigate strategies for luring capital into the solid minerals industry, including undertaking a risk assessment and creating a special purpose entity. The group also recommended that the government establish unique funding programs and incentives to promote additional investments in the industry.
